Better Business Bureau is Warning Homeowners About the Top 5 Contractor Scams

  
     
August 13, 2015

Click here to view our infographic on Top 5 Contractor Scams.

With the start of summer, many homeowners began to get home remodeling and other construction projects underway and before the season winds down many more will also undertake large and small projects.

Eager to get the job done, some homeowners may not do their due diligence and investigate the contractor they choose. The Better Business Bureau (BBB) warns that decision can lead to trouble.

“Homeowners can get ripped-off in a number of ways,” says Steve J. Bernas, president and CEO of the Better Business Bureau serving Chicago and Northern Illinois. “The projects often carry a hefty price tag and it’s very important that consumers know who they are dealing with.”

Here are the top five contractor scams that consumers should look for:

  • Advance Deposit – Unscrupulous contractors who work this scam will often ask for money in advance to pay for materials or for rental of equipment. Once they have cash in hand they disappear or do substandard work knowing most likely they won’t be fired because of the substantial payment you’ve already made.
  • Take My Word for It – These contractors play on your trust, promising to do exactly what you want and even suggest extra touches and upgrades. The promises made don’t get written into the contract and you find that the verbal commitments mean nothing. In order to get the work done, you may face additional costs.
  • No Building Permit – Legally for any substantial construction project, local ordinances require a building permit. However, an unlicensed contractor may try to skirt this requirement or ask that you apply for a homeowners permit. The danger in the homeowners permit is that it makes you responsible for all the work.
  • Unforeseen Problems – The contractor claims that the discovered problems, such as a missing beam, termite damage, or design changes made after the job began means that the project is going to cost you substantially more. In some cases the added costs may be legit, but scam contractors often under bid the project to get the job and then find excuses to hike the price later.
  • Extra Material “Cheap” – These are usually paving contractors that claim to have leftover product from a near-by job. They offer to resurface your driveway and quote a great price. Even if the price is great entering into the deal is risky. If you know nothing about the company, your options may be limited next year if the driveway starts cracking and you can’t find the contractor.

How do you protect yourself from these scams?

  • Never make large deposits. BBB recommends that you limit your deposit to no more than 1/3 of the total cost of the project. Set up a schedule of payments based on the jobs progress.
  • Never settle for a verbal agreement. Get all details of the project in writing. In Illinois, contractors are required to provide a contract for any job over $1,000.
  • Demand that the contractor get the building permit. It will also protect you from hiring an unlicensed contractor.
  • Before signing the contract, make sure it includes procedures for change orders which spell out exactly what work is to be done and the cost of that work. Require that both parties sign the change order before any work is done.
  • Never hire a contractor on the spot. Take the time to check with the BBB for a Business Review on the company. That will help you and make sure you are hiring a contractor with a good reputation. If the work being done is the result of storm damage, it will help you weed out “storm chasers”, who are often not local and could be difficult to find if it turns out their work does not meet your expectations.

For more information on scams, visit www.bbb.org/chicago, like us on Facebook, follow us on Twitter or add us on Pinterest.

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ABOUT BBB: For more than 100 years, Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2014, people turned to BBB more than 165 million times for BBB Business Reviews on more than 4.7 million businesses and Charity Reports on 11,000 charities, all available for free at bbb.org. The Council of Better Business Bureaus is the umbrella organization for 113 local, independent BBBs in the United States, Canada and Mexico, as well as home to its national programs on dispute resolution, advertising review, and industry self-regulation.