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What are common home improvement contractor scams?

Cold calling, free inspections, upfront payments, and false promises are common tactics used by home improvement scammers. While these may sound like normal everyday sales tactics, there are signs to look out for in each scenario:

  • Cold calling may not sound like a scam, however, it often puts pressure on a homeowner to accept services without doing due diligence about the contractor. If a contractor, who you did not call, knocks on your door to offer their services, it is best to not agree to any services, sign agreements, or make any payments until you can thoroughly vet that contractor.
  • Free inspections not connected to a service you requested can often lead to contractors claiming there is a problem or an emergency situation that must be fixed, when nothing is actually wrong. It is important to note, however, that legitimate contractors do often offer a free inspection when potential customers call asking for a price.
  • Upfront payments can be standard for many contractors who expect to complete work quickly. Be very cautious if a contractor asks for full payment upfront. The most unscrupulous contractors simply take the payment and never show back up. Most contractors insist on a down payment to cover materials and some labor costs before starting work, then demand progress payments as the work is completed. 
  • False promises can involve a range of issues and often leave a homeowner frustrated. One common issue involves contractors charging for services they do not complete or materials that are worse than promised.

Like most good deals, if an offer is too good to be true, it may be best to do some research to confirm it is legitimate. If you have questions about your legal rights before or after signing a contract with a contractor, or paying a contractor for services they did not provide, reach out to a Rocket Lawyer network attorney for affordable legal advice.

What are common ways bad contractors may try to cheat homeowners?

Even if the overall job is not a scam, there are several other ways homeowners can be taken advantage of by bad contractors. The following are examples of some unscrupulous practices to be aware of:

  • Underperforming: This can occur when your contractor sends unqualified subcontractors to do their job, or purchases substandard materials.
  • Upselling: Contractors that add unnecessary services or underbid a job knowing additional work and costs will be required.
  • Oral contract: Contractors that will not sign a written contract can make getting a project finished more risky. Written contracts help to hold workers accountable to perform the work to the expected standard.
  • Increased expenses: A contractor adds services or materials without a written change order and then demands a larger payment than the originally agreed project cost.
  • Permitting: A contractor neglects to file the proper permits, despite charging the homeowner for doing so.
  • Warranties: A contractor does not offer a workmanship warranty or offers a warranty that they do not stand behind.

While homeowners may want to simply trust their contractor will complete a job as promised, it can often pay off to monitor the work and progress. If anything is amiss, asking questions and speaking up immediately can prevent additional costs down the road.

What red flags can help me spot when a contractor is taking advantage of me?

Bad contractors may display warning signs. Recognizing these signs can help you avoid difficulties further down the road. Examples of contractor red flags include the following:

  • They ask you to pay for everything upfront.
  • They use materials left over from a previous job to save money.
  • They refuse to provide information in writing about the materials they will be using.
  • They pressure you into a fast decision, with little opportunity to research them or their reputation.
  • They only take cash as payment.
  • They cannot provide licensing, certification, or insurance information.
  • They have negative ratings with the Better Business Bureau (BBB) or other consumer protection organizations.
  • They have a history of complaints with consumer protection agencies like the Federal Trade Commission (FTC).
  • Online reviews from past customers indicate problems like poor workmanship, slow or incomplete work, or cost overruns.
  • Their contact information online is vague or non-existent.
  • Your local licensing board has no record of them, even though they claim to be licensed.
  • The insurance company they claim to work with has no record of them.

Researching the background and any online reviews for a contractor you plan to hire can help you discover whether the contractor is who they claim to be, as well as whether the contractor can do what they say they can.

How can I avoid home improvement problems and delays?

You can protect yourself and your property by learning about the red flags to watch out for and common scams. During any construction project, however, problems and delays can still arise. The following practices can help you choose the right contractor and avoid many problems and delays with your home improvement project:

  • Insist on a written contract, ask about anything that is unclear, and note payment and project approval terms. 
  • Many contractors prepare their own agreements, however, you can often negotiate certain terms. It is also important to make sure your contract is tailored to the type of work you are doing
  • Work with contractors who are licensed, certified, or insured. Many states only require some types of contractors to have a license. General contractors and home builders often do not need licenses, but electricians and plumbers typically must be licensed in most states.
  • Word of mouth may be the best way to find a good contractor, so consult people you know and trust.
  • Ask a prospective contractor to see examples of their workmanship.
  • Get multiple estimates from a variety of contractors. Avoid the temptation to use the cheapest one based solely on the bid amount.
  • Be wary of contractors who use hard sell tactics, such as offering a seemingly steep discount for an immediate decision.
  • Check consumer protection websites and online review sites for consumer feedback, both positive and negative.
  • Do not give the contractor their final payment until you have an opportunity to thoroughly inspect the work.
  • Contractors should have experience with and knowledge of local building permit requirements and procedures, so this should not be a homeowner’s responsibility.
  • Require a written change order signed by both of you before you pay any extra amount.

If you have questions about a suspected scam involving a contractor or other issues with a home improvement project, reach out to a Rocket Lawyer network attorney for affordable legal advice. If you need tax help, Rocket Lawyer can now match you with a Tax Pro for affordable and convenient tax filing services.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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