Today, we begin a series of how to protect yourself from contractor scams. We’ll explore the first scam today.
Crooks go where the money is. According to houselogic.com, Americans spend as much as $22 billion a year on construction projects. It’s no surprise that home improvement has become a favorite target for fraud artists. Some of these shady characters use amazingly well-polished hoaxes that are tricky to spot until it’s too late.
The vast majority of contractors are honest, hardworking professionals. Protecting yourself against the few bad apples requires checking references, having a solid contract and being alert to the warning signs of these top five contractor scams.
Scam 1: I need the money up front
This is the most common ruse reported to the Better Business Bureau, says Erin Dufner, vice president of the organization’s Austin, Texas, office. Your contractor explains that because he has to order materials and rent earth moving equipment to get the job started, he needs, say, 30% to 50% of the project price up front. Once you’ve forked over the dough, one of two things happens: He disappears on you, or he starts doing slapdash work knowing that you can’t really fire him because he’s sitting on thousands of your dollars.
How to protect yourself: Never prepay more than $1,000 or 10% of the job total, whichever is less. That’s the legal maximum in some states, and enough to establish that you’re a serious customer so the contractor can work you into his schedule—the only valid purpose of an advance payment. As to the materials and backhoe rentals, if he’s a professional in good standing, his suppliers will provide them on credit.
We’ll explore scam #2 next. Check back here tomorrow.