How To Protect Yourself From Contractor Scams

Feb 26, 2021 | Commercial Litigation, Property Damage

In the aftermath of a natural disaster, communities often come together to offer support and recovery assistance for survivors in need. Unfortunately, there are opportunistic criminals that instead take advantage of natural disaster victims through contractor scams.

Scammers swing into action to try to make a quick buck off storm victims when they’re the most vulnerable. Many of these predatory contractors appear with the promise of restoring the homes and lives of disaster victims–only to leave behind unfinished work and slink away with someone else’s hard-earned money.

Signs of a Contractor Scam

It’s important to recognize the signs of contractor scams when looking for home repairs after a natural disaster. 

  • They are non-local. Be wary of out-of-town businesses that swoop in to make a profit. Contractor scammers travel between states and counties to avoid detection from law enforcement.
  • They make door-to-door solicitations. While scammers often reach potential victims via phone or email, unannounced home visits are most common in contractor scams. Always ask for an office number and address if someone does show up at your door uninvited. 
  • They push limited-time offers. No legitimate contractor will pressure you into signing a contract in order to lock in a discount without a damage inspection and formal estimate.
  • They ask for a large amount of money upfront. Contract fraud experts advise clients to never turn over more than 30% of a down payment for the project. Many scammers will take your money to fund another project they’re already behind on.
  • They’re using someone else’s license. If a contractor’s license has been revoked and they cannot get another license, they will sometimes apply for another one under a family member’s name.
  • They ask the homeowner to pull the permits. If a contractor is unlicensed or using someone else’s license, they might ask you to pull the permits under the false implication that it will save you money. You want the contractor to pull the permits because whoever does so is fully responsible for the project. Ethical contractors will not ask clients to do this.
  • They put up low bids and vaguely written agreements. In some cases, predatory contractors will conduct hasty project assessments and leave out details in your estimate in order to sell you a low bid. 
  • They ask for more money to complete the project. While it’s not uncommon for projects to go over budget, asking for more money in the middle of a project is a red flag. 

 

Protecting Yourself from Contractor Scams

Doing your research is imperative if you’re looking for an ethical contractor to make repairs to your home. Here’s what you can do to protect yourself from contractor frauds.

  • Take your time. While most survivors of a natural disaster are eager to repair their homes, it’s important to shop around. Get an estimate from your insurance company and get quotes from multiple contractors. You should never jump on an offer that seems too good to be true without comparing it to other quotes.
  • Ask for references. The relationship between a contractor and their past clients says a lot about their ethics. Search bbb.org for any complaints. You should also search by the address of the business since many contractor scammers change the name of their business often.
  • Verify the contractor’s license and insurance. Contractors should have disability and workers’ compensation insurance. If they don’t, you may be liable for accidents on your own property.
  • Make sure the contractor has obtained the necessary permits. Remember, an ethical contractor will not ask you to pull the building permits yourself.
  • Never pay in advance, wire money, or pay with reloadable gift cards. There is no legitimate reason to put more than 30% down on a project or do business through these forms of payment. You should never offer financial information over the phone.
  • Take pictures. It is helpful to take a photo of your contractor, their driver’s license, vehicle, license plate, and business card.
  • Get everything in writing. Read your contract carefully and take it to an expert if you don’t fully understand the terms. Never sign a contract that contains blank spaces. Make sure the contract details all work to be performed, the costs, a projected completion date, and how to negotiate changes and settle disputes.
  • Report your concerns. If you think you or someone you know might be a victim of a contractor scam, you should immediately report it to your local law enforcement agency. You can also contact the Texas Office of the Attorney General by calling 800-621-0508 or call the free FEMA Disaster Fraud Hotline at 866-720-5721 available 24-hours a day.

 Click here for a complete list of tips to help you carefully select a contractor.

Storm Damage? Here’s What You Need to Know

As a reminder, Texas homeowners and renters in the 77 counties designated for individual assistance who sustained damage may now apply for disaster assistance with FEMA.

The fastest and easiest way to apply is by visiting www.disasterassistance.gov. There is no wait to register online and it is accessible 24 hours a day, seven days a week. If it is not possible to register online, call 800-621-3362 (TTY: 800-462-7585). The toll-free telephone lines operate from 8 a.m. to 10 p.m. CDT, seven days a week.

Low-interest disaster loans from the U.S. Small Business Administration are available to businesses, homeowners, and renters. Call the SBA at 1-800-659-2955 (TTY: 800-877-8339) or visit www.sba.gov/services/disasterassistance.

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