Home Improvement Scams & How To Spot Them
Take care if you’re considering hiring anyone to improve your home or property. Home improvement scams are more common than you may think—and they can be hard to spot.
Scam contractors use several ways to cut corners or downright defraud unsuspecting customers. Some do sloppy or unprofessional work that requires more repair down the line, while others leave a job unfinished or disappear with their pay before work even begins.
If you’ve put in the time to come up with a plan to improve your home and you’ve found financing to pay for it, the last thing you want is for that hard-earned money and preparation to go down the drain.
Warning Signs of Home Improvement Scams
They Insist on Getting Paid Up-Front
While most contractors will ask for a deposit when you hire them, be wary of any contractor who demands you pay more than a third of the total fee upfront. This early price tag is likely a scammer who will do shoddy work or leave without working at all and take your “deposit” with them when they go.
They Refuse to Supply References
Never hire a contractor without speaking to someone who’s used their services in the past. The Federal Trade Commission (FTC) suggests homeowners ask past customers detailed questions about a contractor’s work, including timeline and final cost. If a contractor is in the middle of another job, ask if you can check out their work yourself.
If a contractor refuses to furnish the names and contact information of previous clients, it may be best to seek a new option.
They Have Bad Reviews
Before hiring any small business, you’ve never used, it’s a good idea to check them out on the Better Business Bureau (BBB) website. Once there, you can view ratings and read the reviews. Pay close attention to the negative comments and be wary of five-star ratings without explanation.
They Demand Payment in Cash
The FTC recommends paying contractors with a check or credit card so you can contest the charges if something goes wrong. Cash leaves no trail, which makes it easier for a scammer to abandon a job without doing much (or any) work at all.
Their Prices Are Shockingly Low
Don’t get conned by a contractor who severely underbids all competitors. You might get lucky and find someone who is just starting out and can still do great work, or you might be dealing with someone who will cut every corner and end up costing you more than you thought you were saving. Ask many questions if they quote you an unbelievably lower bid than the going price for the work. If you only get evasive answers, look elsewhere.
They Won’t Put It in Writing
Never hire anyone to do work on your home without a written contract. The BBB advises homeowners to include as many details as possible in the agreement, such as payment terms, a definitive date for the start and completion of the project, warranty information, and a clear description of the job.
A contractor who tries to convince you there’s no need to pull permits wants to avoid the authorities at all costs. You’re likely dealing with an unlicensed worker or who will cut corners wherever possible. The lack of proper permits can also cause you problems down the line when you try to sell your home.
Types of Home Improvement Scams
Just “Happened to Be in the Neighborhood”
The smiling contractor at your door claiming to have recently done work in your neighborhood just happened to notice your home can use some repairs, too. They suggest you hire them to do it for you—for a great price, of course.
Don’t fall for every house call. There’s a slight chance you’re looking at a rookie contractor just starting to build a referral base, but it is far more likely that your uninvited visitor is a scammer who will do sloppy work, leave the job half-finished or disappear with your money. If the contractor does seem legit, look them up on the BBB site and ask for references before hiring.
Stay safe: Never hire a contractor on the spot. Always ask for proof of license and insurance as well as references from previous clients. Also, never pay for a project in full before it’s completed.
The High-Pressure Sales Scam
Some irreputable home improvement companies use high-pressure sales tactics to get you to sign a contract. They may offer a special deal that is only available for a limited time or claim they can only do the work if you sign a contract right away.
Unfortunately, though, these tactics are only a ploy to pressure you into making a decision before you are ready. They may also hide additional fees or charges in the contract, or promise things that they cannot deliver.
Stay safe: Never rush to hire a contractor. Don’t be swayed by limited-time offers, and always carefully read the contract before signing.
The “As Seen On TV” Scam
In this home improvement scam, an alleged contractor tricks you into thinking a reputable source endorses a product or service. They may claim that their product or service has been featured on a popular TV show or website, or that celebrities have used it.
However, these claims are completely false or highly exaggerated. The product or service may not live up to its promises, or it may be overpriced compared to similar products or services.
Stay safe: Always do your research and read reviews from other customers on multiple platforms before hiring a contractor. Don’t assume celebrity endorsements or claims of popularity are legit without verifying them first.
The Insurance Scam
In this variation, scammers claim they can help you get a new roof or another home improvement project covered by your insurance company, despite the fact that there was no
covered event making the project necessary. This, of course, is insurance fraud, which is illegal and can lead to fines and jail time.
Stay safe: Always check with your insurance company before starting any home improvement project. Make sure the project is covered by your policy and that you understand the deductible and other terms of your policy.
Don’t get ripped off by a scammer! Do your homework well before hiring any contractors this (or any) season. It’s one surefire way to ensure your home improvement project goes smoothly and without unpleasant surprises.
This article is for educational purposes only. WeStreet Credit Union makes no representations as to the accuracy, completeness, or specific suitability of any information presented. Information provided should not be relied on or interpreted as legal, tax or financial advice. Nor does the information directly relate to our products and/or services terms and conditions.