How to Identify and Avoid Contractor Scams

Contractor scams are both common and costly so here's everything you need to know about identifying and avoiding contractor scams

Contractor scams are both common and costly. The best way to avoid these scams is to be aware of how they work and use your best judgment.

By Matt DiBara

Here’s everything you need to know about identifying and avoiding contractor scams:

Do Your Research

Perform due diligence to ensure you only work with reliable contractors. Here are a few tips:

  • Check the company’s website and consider visiting the office in person to ensure everything adds up. Some scammers have fake websites with no real presence; they book online appointments and disappear after receiving a fee.
  • Check licenses and permits and only work with authorized contractors. In most cases, you will have the option to verify licenses online.
  • Run a background check and avoid contractors with a lot of complaints. Verify with your local Better Business Bureau (BBB) to read what others say about a contractor before working with them.

Moreover, it might be a good idea to stay away from random people calling or visiting you simply because they are in the neighborhood or have a special offer.

Ask for References and Check Reviews

Your safest bet is to work with a contractor with whom you have prior experience or to ask a trustworthy source, such as a friend or family member, for references. However, that may not always be possible.

If you’re not able to receive a referral, then do not shy away from asking the contractor for details, including past projects and references. Also, don’t blindly trust what you see on their social media pages or official sites. Remember that about 30% of online reviews are fake. Scammers are known to publish fake reviews to lure clients, so you must proceed with caution.

Always check third-party platforms such as Trustpilot for reviews, and avoid companies that do not look legitimate.

Do NOT Sign Contracts Until You’re Sure

Always get everything in writing, from estimates to what is included in the package you select. This will help you avoid issues such as a contractor saying, “I never agreed to do this.” Avoid companies that insist on solely verbal agreements.

Also, do not make the mistake of signing contracts until you have read everything. Get in touch with a professional if you do not understand the legal terms, and do not be afraid to ask for revisions.

Most contractors are willing to make changes. Companies that decline to edit the contract are usually not honest, hence it’s best to keep away from them.

Avoid Deals That Look Too Good to Be True

If it looks “too good to be true,” then it probably is. Some untrustworthy companies run special discounts and offers to attract innocent customers, only to come up with excuses like “we ran into unexpected problems,” “the permit is taking too long,” etc.

Some will even offer a low rate because they have “materials left from the previous job” or “because they like you.” Keep an eye out for red flags such as companies that encourage you to start the job right away or ask for cash payments.

To be safe, compare multiple bids and don’t automatically choose the lowest estimate, especially if it looks too cheap.

Never Pay Up Front in Full

Beware of contractors who ask for a full down payment. It’s a major red flag, and is also illegal in some situations. For example, in most cases, out-of-town contractors cannot ask to be paid in full (in advance) after a disaster.

The key to avoiding contractor scams lies in being careful and doing thorough research. Don’t rush into things and only work with contractors you can trust.

About the author:

Contractor scams are both common and costly so here's everything you need to know about identifying and avoiding contractor scams
Matt DiBara

Matt DiBara, the owner of DiBara Masonry, is the founder of The Contractor Consultants. He’s the fourth generation of Italian immigrant-built masonry that is ranked five stars on Google, Yelp, and HomeAdvisor. He’s known as the “undercover contractor” who works with celebrity clients and everyday homeowners to provide advice and insight about how to manage construction projects.

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