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Consider this situation – a self-proclaimed representative for a home improvement provider comes to your house unsolicited, knocking on your door. They state they are in the neighborhood and provide services to homeowners nearby. They see that your home needs repair, and since they already have material and a workforce here, they can “offer you services at a deep discount” – if you can pay them in cash or check up front. So, immediate service, with no hassle regarding scheduling. Examples of such services are siding replacement, roof or driveway repair or sealing, and patio/deck work.

So what’s the problem? Actually, there are many potential problems. Be aware of the following fraud risks:

• This contractor might not provide the highest quality service.
• The work may not meet the building code requirements of the local municipality.
• The material used may be of inferior quality.
• The contractor may stop mid-work, with your property in a state of construction, and demand more money than what was originally agreed upon.
• The basic work may be finished, but the contractor does not clean up the waste material and debris.
• The contractor may assure you that the cost of the project can be passed on to your insurance company without asking you to seek verification before the work is started.
• The individual isn’t just a poor-quality contractor but is actually an all-out fraudster who will take your cash and provide no services.
• The contractor (fraudster) may use a check you provide as a template to create counterfeit checks in the future.
• The fraudster may try to obtain personal identifiable information from you that they can use to perpetrate identity theft in the future.

Ways to avoid contractor fraud include the following:

• DO NOT
  • Hire contractors who: a) work door to door, b) come from out of state and do not provide an address or phone number, or c) refuse to show identification
  • Pay 100% of costs in advance
  • Pay with cash
  • Provide personal financial information, including checking account, credit card or debit card numbers
  • Follow the contractor’s suggestion about a particular lender if borrowing money is needed to pay for the home improvement project
  • Make a final payment until you are completely satisfied with the job, all debris is removed, and any necessary building inspections have been completed
    
• DO
  • Get bids from multiple (at least 3), established contractors who can provide those bids in writing
  • Ask to see copies of any required licenses the contractor should have and obtain proof that the vendor is bonded
  • Call your home insurance agent for verification if the contractor promises that the project can be paid for by filing an insurance claim (such as for storm damage)
  • Seek out references from recent customers of the contractor
  • Confirm with the appropriate state licensing agency’s website or hotline to confirm that licenses are valid
  • Search online through the state licensing agency, Better Business Bureau, and consumer review sites (such as Yelp or Google Business Profile) to see if there are complaints posted about the contractor
  • Read the bids and related contracts carefully and ask questions before signing anything

If a contractor convinces you to hire them in a scenario as described here and insists that you go to your credit union to withdraw cash immediately to pay them upfront, tell the manager of your local branch that you are being pressured and threatened.

If you are looking for more information on making smart home improvement decisions, including how to hire contractors, read the FTC brochure “Hiring a Contractor”, available at consumer.ftc.gov/articles/how-avoid-home-improvement-scam. The FTC can also be contacted at 1-877-FTC-HELP to request the brochure.