Don't be a victim of home contractor fraud

    Do your homework before hiring a contractor

    Published: May 06, 2014 04:00 PM

    With warmer weather here, you may be planning a home improvement project. But we're seeing a lot of complaints about roofing contractors, paving companies, and other home improvement service providers. So it's wise to exercise caution before signing a home improvement contract.

    For instance, the Kansas attorney general in April announced that a court had ordered a Minnesota roofing company to pay an $80,000 penalty and barred it from doing business in the state after it was accused of engaging in deceptive and unconscionable practices while selling roofing services door-to-door and of attempting to collect money from consumers for work never performed.

    In another Kansas case announced earlier in the month, the attorney general said that two paving contractors had been ordered to pay a $100,000 civil penalty in connection with allegations that in helping a consumer fill out a check for payment, they wrote $17,500 instead of the $1,750 agreed-on price. The state said the consumer could not write well on his own. The company had solicited the consumer's business by going door-to-door and asserting that it was offering a good deal because asphalt materials were left over from a previous job, a tactic we've seen used before. Along with the penalty, the company was ordered to reimburse the consumer and was barred from doing further business in the state.

    Also in April, the Kentucky attorney general announced that a roofing contractor had pleaded guilty to one count of theft by deception under $10,000 and was given a two-year prison sentence that was suspended on the condition that he pay $3,700 in consumer restitution. He previously had been indicted on 26 counts involving the same charge, primarily in connection with storm-related repairs. Most of those cases still are pending.

    Finally, the New York attorney general recently said he had filed a lawsuit against a home improvement contractor whom he accused of defrauding consumers by accepting payments for work he never performed and for supplies that he never ordered. In one case, the attorney general said, the contractor took more than $50,000 from the parents of a disabled adult for home improvements needed to allow them to keep their daughter in their home. But the project wasn't completed as promised, and work that was done was substandard.

    For more tips, read the Consumer Reports Retirement Guide.

    What to do

    Never hire a home improvement contractor without first doing your homework. Here are tips on how to proceed.

    Check the Better Business Bureau.  Find out whether the contractor has a report at the BBB. If it does, don't pay attention to just the letter grade the BBB has given the company. Also review the number and types of complaints, if any, and look for reports of government actions.

    Search for complaints and reviews. Try a web search with the company and contractor name and such words as "complaints" and "reviews."

    Check your state's law.  Review your state's laws and regulations governing home improvement contractors. You typically can find them on your state's consumer protection website, along with advice. Some states, for example, require contractors to be licensed or registered. Some also give consumers a three-day right to cancel a contract with a contractor.

    Beware of cold calls. Avoid doing business with a contractor that contacts you unsolicitedly by telephone, mail, e-mail, or by going door-to-door. Don't fall for the old scam in which a contractor says he's offering a great deal because he has materials left over from another job.

    Get references. Ask the contractor to provide references from at least three past jobs. Contact the former customers to find out how the work is holding up. Read our report "Find a Contractor Who Won't Rip You Off or Ruin Your Project" for our advice on the questions you should ask when checking references. Or better yet, get referrals from friends and family.

    Anthony Giorgianni

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