03 Sep Buyer Beware: Post-Storm Contractor Scams
A devastating flood, hurricane, or severe tropical storm can leave a path of wreckage both to our property and personal situations. However, probably one of the least expected dangers after the storm passes is the rush of fraudulent or shady contractors that descend into hard-hit areas. It is such an issue that even the Federal Trade Commission has issued a warning about them. Today, we are going to look at a few things you need to be on the lookout for, warning signs, and how to protect yourself.
Worried homeowners are prime targets for being ripped off….don’t be one of them!
How Fraudulent Contractors Operate
Fraudulent roofing contractors scam unsuspecting business owners and homeowners, typically during a crisis like a hurricane. Most of the time, they demand upfront payment claiming they need to get supplies. Once you hand over the cash, they usually disappear. If they do complete the job, it can be shoddy work using sub-par materials. Sometimes, they even use stolen materials and equipment.
Shady contractors operate year-round, but after a tropical storm or hurricane, they tend to put in extra effort trying to take advantage of homeowners. If someone promises speedy repairs and they sound too good to be true, they probably are!
Seven Signs of a Contractor Scam
Out Of Towners
When a large storm hits an area, its not uncommon for storm restoration companies and larger contractors to travel where their work is needed. Many times, these are reputable companies and they can even partner with insurance companies. An out-of-state address is not always a dire warning sign, and they may be a legitimate business in another area.
However, if your contractor has a PO Box, uses no address, or has a hotel as an address, you want to stop and do some investigating. Other signs that should raise your awareness are temporary business cards, companies without a digital presence (such as a website or a Facebook page) or trucks that have no signs or markings. What you are trying to do is make sure whoever is working on your home is a real business. Whatever paperwork they hand you, make sure to Google them, search the address they give you, ask for their drivers license…do you homework.
This should be a huge warning sign! More than likely, if you pay in cash before the job is complete, you will never see the contractor again. Once again, do not be pressured into hiring a shady contractor because you feel desperate and overwhelmed after a major storm.
A experienced roofing contractor who takes pride in their work would not insist on cash only payments. If you pay by check or credit card, you will have a money trail that will help if you ever need to make a claim for fraud. In addition, a contractor who takes credit cards shows signs of being a more established business. However, don’t just use that as your only guide since it is easy to accept credit cards today. You want to apply all these signs to make a good overall judgement.
No Estimate or Contract
When hiring anyone to work on your home, a paper trail is essential! Having a contract will guard you legally against unfinished work at a future date. Having a signed estimate or contract will also help guard against surprises at the end if the contractor claims your job will cost more. This is also another huge area where homeowners can get taken advantage of…at the end of the job the contractor says there was more work involved than they initially thought and now you owe a significant amount of money.
In this day and age, any legitimate roofer or general contractor will be able to show some type of references for past work. This is a must: asking for references. You want to make sure whoever is working on your home has the skills and ability to complete repairs. Besides searching the internet on your own, you can ask for their suppliers as a reference, this will show very quickly if they are a legitimate business as most roofers don’t just go to the local big box store to buy materials. You can also ask for any networking groups, trade associations, local commissions, or other civic groups they might belong to. If they are out of towners and a legitimate business, they will more than likely be happy for you to check them out. Remember, if they are a legit business and they are in town to help out, having a local reference (such as yourself) will be in their best interest.
Their are a few things every contractor must have to be a legitimate business: things such as insurance, state licenses, workman’s comp, and of course references (see above)! These are all required to operate not just in South Carolina, but pretty much everywhere. If a contractor can’t furnish the basics, or dances around the requests…..run away! Again, don’t panic because of your current situation, hiring a poor or illegal contractor can actually cause you more harm down the road.
I do want to highlight here as above, not one of these signs individually will give the entire picture. You need to use your personal judgment. Sometimes very capable folks will travel because they need work. They may have years of experience and are more than qualified, but getting an under insured contractor can be a big risk to your personal property if they are hurt on the job while working on your home. Most people don’t know that you would be liable for their personal injury.
Too Good To Be True
Lastly, the old adage comes into play here, if it sounds too good to be true, then it probably is! Roofing contractors who say they can offer a discount because they have left-over materials or because they buy in bulk should be avoided. These are some of the oldest warning signs in the book. Most people don’t know that there are only a few major roofing shingle manufactures in the country and most roofers get their materials from the same suppliers. You have to sell a ton of shingles compared to your competitors to actually get bulk discounts.
One great way to help protect you in this situation is asking your claims adjuster or insurance agent to look over any contracts or estimates to see if they seem in the ballpark. Your agent or adjuster will be able to spot the warning signs of a shady contractor very easily. They are in the business and will know exactly what things should and shouldn’t cost. This will help with price gouging, too. Many times after a storm, contractors will just say materials are more expensive, labor is more expensive, etc.
- Arrive at your property unannounced.
- Claim to be backed by FEMA – they do not endorse individual contractors.
- Provide estimates that are extremely high or low in comparison to other offers.
- Give an estimate in one lump sum and do not address the cost of individual items and tasks.
- Insist on submitting insurance claims on your behalf.
- Ask you to endorse insurance checks to them.
- Don’t get appropriate permits when needed.
- Don’t have the appropriate equipment or labor.
- Have records of complaints filed against them by the local Better Business Bureau.