Americans lose millions every year to phony and dubious home improvement scammers : Internet Scambusters #1,082
Home improvement projects are booming, raking in almost $500 billion a year - but greedy scammers are taking their cut with tactics and tricks that can easily catch you out.
In this week's issue, we'll explain the most common scams, the red flags that alert you to dubious tactics, and the importance of doing your research for any home improvement work.
Plus, we also have an urgent warning about scams related to the Lahaina, Maui fire tragedy and other natural disasters.
Let's get started…
Top 10 Home Improvement Scams and Safety Steps
Americans spend close to $500 billion a year on home improvement. And a chunk of that money, as much as $40 million, ends up in scammers' pockets.
Ever since the pandemic, more people have been opting to improve their homes instead of selling. But the crooks are keeping pace with them, with home improvement fraud topping the league table of scams for some North American regions.
Add to that the seeming rise in destruction caused by fire, storms, and other natural disasters in the past couple of years.
Result: The home building, remodeling and repair industries are struggling to keep up with demand for their services. This has opened the door for scammers to target homeowners so desperate to find a contractor they don't follow all the commonsense check steps they should.
Almost half of the people who plan home improvements actually delay or abandon them because they can't find a contractor.
Roof repairs and replacements account for the biggest proportion, around 15 percent, of con tricks, followed by painting and concrete projects. Kitchen renovations also figure highly among the victims. In fact, according to the New York Post, one in three homeowning improvers have fallen victim, with average losses of more than $12,000 each.
The 10 Biggest Home Improvement Scams
In a nutshell, the most common home improvement scams result from unlicensed and unqualified, self-proclaimed contractors who do a bad job or no job at all, maybe heavily overcharge, and then disappear with your money.
Per the NY Post, almost half of the victims complained about work taking longer than expected; one third of victims reported work unexpectedly going over budget, while a similar proportion said work quality was lower than expected.
Other problems included workers showing up late or leaving early, uncleared messes, and rude or unprofessional behavior.
The 10 most common home improvement frauds and tactics are:
- Unlicensed and unqualified contractors who do a bad job, may not be properly insured, and quit before a project is completed.
- High-pressure sales tactics offering time-limited discounts, often insisting you have to sign up immediately.
- Upfront payment demands. It's not unusual for a legitimate contractor to require advance payment for materials but fraudsters go way beyond this and then sometimes disappear without a trace.
- Bait-and-switch fraudsters quoting an extremely low price then claiming to have run into unforeseen and costly issues.
- Using or switching to cheap materials, resulting in a shoddy job and questionable durability.
- Storm chasing. Severe storms or other natural disasters are always followed by scammers offering cheap, quick fixes. Once you pay them, they disappear or do poor quality work.
- Bogus discounts. This is a common scam in many industries. The real price is inflated, sometimes even doubled, then you're offered a discount, which may still conceal a big profit. Sometimes, fraudsters claim they have materials left over from another job so they can do it cheaply.
- No contract. You shake hands on a deal or just accept a verbal offer, then discover you have no legal protection to fall back on if things go wrong.
- Home improvement loan scams. Crooked contractors say they can arrange a loan for you, but you end up paying extortionate rates or you discover your home is being used as collateral.
- Door-to-door tricksters saying they happen to have spotted a problem with your home - usually the roof - or that they "happen" to be in the area doing work for neighbors, usually paving, painting, or bug spraying. Not everyone who does this is a crook, but it should put you on your guard.
How To Protect Yourself From Home Improvement Scams
The three most important safeguards against getting scammed are: research, research, and research. The more you know about a contractor and their reputation, the more likely you are to get a quality job at the right price. So:
- Is the contractor licensed and insured? Your state or county government will know.
- Ask people you trust for recommendations.
- Check online reports including ratings from the Better Business Bureau, the local Home Builders Association, and customer reviews on listing sites like Yelp.
- Ask contractors for references from satisfied customers - and then contact them.
- Get multiple, written bids. Compare them carefully; they may not include exactly the same things.
- Get a written contract that includes materials to be used. Read it carefully and have it changed if you're unhappy with some of the terms.
- Pay as little as possible upfront. Perhaps agree on staged payment terms where you pay as each part of the project is completed. Some states actually limit how much a contractor can request.
- Don't make the final payment until you're completely satisfied with the finished job.
- If you need a loan, talk to your bank or other reputable lender.
- Give yourself plenty of thinking and checking time. Never yield to sign-up-now pressures.
- Beware of door-stepping salespeople. Ask them where they're currently working, and if anyone tells you they spotted an issue with your home, have it checked out independently.
Finally, of course, keep careful records of all communication - by letter, phone, SMS, or email. If you run into problems, try first to resolve it with the contractor. If you don't succeed, talk to your local consumer protection office. And if all else fails, consult an attorney.
This Week's Alerts
Vivint compensation: The US Federal Trade Commission (FTC) is notifying more than 9,000 people whose credit records were allegedly misused by home security firm Vivint Smart Home. The company has agreed to pay $20 million in civil penalties and compensation. If you think you're entitled, visit Vivint Smart Home Settlement.
Disaster scams: Those storm-chasing scammers we mentioned above are targeting victims of the tragic Lahaina fire on Maui. A horrible new scam has emerged in which crooks claim to be involved in collecting DNA samples for checking with those of potential victims. Of course, they want payment for their nonexistent service. Samples are being collected for free at the Hyatt Regency Monarch Ballroom in Kaanapali from those with missing relatives. Family members living elsewhere in the US wishing to provide DNA should contact the FBI at (808) 566-4300 or email HN-COMMAND-POST@ic.fbi.gov.
Watch out too for fake charity pleas for money in the wake of Tropical Storm Hilary in the American Southwest, as well as seasonal storms in the Midwest. Contribute only to known reputable charities, and never pay money via untraceable sources like gift cards and cryptocurrencies.
Fake Amazon ad: A clever fake ad for Amazon has been showing up in Google searches with links that will eventually freeze a victim's PC. It's clever because it includes Amazon's genuine Internet address. Because it's an ad, you'll see the word 'Sponsored' at the top. If you click on it, you get a fake Microsoft Defender security alert pop-up asking you to call a bogus Microsoft security specialist who will ask for money. If you need to visit Amazon, just go to amazon.com. And if you get the pop-up, shut down and restart your PC.
Time to conclude for today -- have a great week!