Since 2007, 109,000 home improvement scams have been reported to the Federal Trade Commission (FTC). While home improvement scams (often referred to as handyman scams) are common, they’re not always easy to spot. Learning about this type of financial scam can help you identify fraudsters faster and protect your home and money:
The “free” inspection: It begins with a door knock or phone call. Scammers claim to notice issues in your home, offer a no-cost inspection, and present a seemingly fair quote. Once you agree, they ask for full upfront payment or a large deposit, then disappear.
Cheap post-disaster repairs: You receive a phone call from a fake contractor after a natural disaster offering affordable repair services and if you use them, you can get reimbursement through your homeowners’ insurance. You give them a deposit, but the job never gets completed.
The project that snowballs: It usually begins with hiring a contractor to complete a small job at your house. When they arrive to do the work, they point out other, costlier “issues”.
Wondering how to tell if a contractor is legitimate? Here are 8 warning signs to watch out for when you contact—or are approached by—a person claiming to be a professional contractor or handyperson:
They ask for payment in a form that’s harder to trace or recover—such as cash, prepaid debit cards, or money transfer through a digital payment platform.
They claim they have construction materials “left over” from another job to justify giving you a steep price discount.
They try to arrange financing for your project; for example, recommending a specific lender offering home renovation loans.
They demand full payment for the job up front.
They tell you that you need to obtain any necessary building permits.
They try to persuade you to sign over a claim payment from your insurance company.
They pressure you to make an immediate decision to hire them.
They refuse to sign a contract, insisting instead on a “handshake” deal.
Scammers will always be on the prowl, looking for inventive new ways to part honest people with their hard-earned money. But there are steps you can take to avoid becoming the victim:
Ask for references: Since they’ve likely left a trail of deception behind them, criminals will be reluctant to share this information.
Find vetted contractors: Contractors who belong to the National Association of the Remodeling Industry (NARI) meet strict standards for quality and integrity. Look for professional remodelers on their website.
Get it in writing: A binding contract outlining your project scope and costs can provide assurance that your home improvement project is completed correctly and on time.
Read online reviews from other homeowners: Do a bit of digging online when you’re considering hiring a contractor. What have other customers said about the company’s or individual’s performance?
Never pay in full up front: Reach out to your state consumer protection office to see if there are any laws limiting how much of a deposit contractors can require. Do not make a final payment until the project is 100% complete.
If your home renovations or repairs were funded by a U.S. Department of Housing and Urban Development (HUD) loan, you can report contractor fraud by calling toll-free 800-225-5342 or TTY 800-877-8339.
Resources:
National Council on Aging (NCOA)
