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How to Avoid Contractor Rip-Offs

Not all contractors operate within the law. Here are some tip-offs to potential rip-offs. A less than reputable contractor:

  • solicits door-to-door
  • just happens to have materials left over from a previous job
  • only accepts cash payments
  • operates without a license or required government certification
  • refuses to sign a written agreement for the job(s) to be performed
  • asks you to get the required building permits
  • hires employees or subcontractors illegally and without verifying their qualifications
  • pays workers under the table
  • fails to provide a proper estimate and timeline of the work to be performed
  • does not list a business number in the local telephone directory
  • tells you your job will be a "demonstration"
  • pressures you for an immediate decision
  • asks you to pay for the entire job up-front
  • suggests that you borrow money from a lender the contractor knows. If you're not careful, you could lose your home through a home improvement loan scam

Questions for Contractors

Separate from asking for references from others, many states allow you to look up the contractor's license online and verify that the contractor is in good standing with the state regulatory board. Moreover, one should also directly ask the contractor:

  • Are you licensed?
  • Are you bonded?
  • Do you carry workers compensation insurance?
  • Do you carry liability insurance?
  • Do you carry errors and omissions insurance?
  • Do you have a portfolio of previous projects that you have completed?

Checking References

Talk with some of the remodeler's former customers. They can help you decide if a particular contractor is right for you.

  • Can you visit a home where the contractor completed a job?
  • Were you satisfied with the project? Was it completed on time?
  • Did the contractor keep you informed about the status of the project and any problems along the way?
  • Were there unexpected costs? If so, what were they?
  • Did workers show up on time? Did they clean up after finishing the job?
  • Would you use the contractor again?

Where to Complain

If you have a problem with your home improvement project, first try to resolve it with the contractor. Many disputes can be resolved at this level. Follow any phone conversations with a letter you send by certified mail. Request a return receipt. That's your proof that the company received your letter. Keep a copy for your files.

If you can't get a satisfactory outcome, consider contacting the following organizations for further information and help:

  • State and local consumer protection offices and/or license boards
  • Your state or local Builders Association and/or Remodelers Council.
  • Your local Better Business Bureau.
  • Action line and consumer reporters. Check with your local newspaper, TV, and radio stations for contacts.
  • Local dispute resolution programs.
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