If a worker comes to your door and tells you he has leftover materials from a neighbor’s project and can give you a deal on building a deck or replacing windows, do you let him do work for you? Mark Huffman asks this in a piece from ConsumerAffairs.
If you said yes, you would lose that money, as the worker would likely collect the money and then disappear or do an inferior job on the work. It is an old swindle that has been forgotten with the advancement of technology, but it has come back in spades with the pandemic and severe weather.
JW Surety Bonds recently completed a study that showed one in 10 Americans have fallen victim to contractor fraud, with the average loss being $2,426. Approximately one out of three of those victims was scammed by a contractor that was referred to them and not by a stranger.
More than half of the victims said they checked the contractor’s information before hiring them but were still swindled. According to the study, the most likely group to be victimized by these frauds is baby boomers, partly because they are the most likely demographic to own a home.
Where the money is
Why the surge in home contractor swindles? Because scammers tend to go where the money is.
During the pandemic, there was a big increase in home improvement projects. People were spending more time at home, and the demand for remodeling contractors rose sharply.
In the last two years, there have been natural disasters, such as tornadoes, that damaged homes. As homeowners looked for someone to do the work, scammers stepped in to fill the void.
The study found that the most common contractor fraud – reported by 34 percent of victims – was someone who actually did the work but did it quickly, providing low-quality results without a contract.
Twenty-three percent of victims said their contract provided a very low estimated cost and then increased the price by the end of the job, while 22 percent said their contractor demanded a large upfront payment and then did a poor job.
Top five contractor actions
The top five contractor actions that alerted scammed clients to the fraud were:
- Didn’t complete the job or did poor quality work that failed to meet agreed-upon standards (63 percent).
- Frequently arrived late or missed appointments without a valid reason (40 percent).
- Added extra charges or fees not previously discussed (26 percent).
- Refused to answer questions or was evasive about progress updates (25 percent).
- Provided either no written contract or a vague contract without job specifics or costs (13 percent).
Performing due diligence before hiring a contractor may help you avoid fraud. License requirements will vary from state to state, so a good place to start is with your city or county building permits department. Find out from official sources whether the project needs a permit.
When evaluating a contractor, check for relevant experience, customer reviews and whether the contractor is covered by personal liability insurance and worker’s compensation.