Home Repair Scams: How to Spot a Fake Contractor

A friendly contractor knocks on your door. They just finished a job down the street, have materials left over, and noticed your roof needs work. They can start today at a great price, with cash up front. It’s one of the oldest home repair scams there is, and it still works, especially on older homeowners and after storms.

The FTC says home improvement scammers promise to do the work but leave you worse off: shoddy work, damage to your home, overcharging, or taking your money without doing anything.

How do home repair scams work?

The FTC lists the tactics to watch for. Scammers:

• Knock on your door looking for business because they’re “in the area.”
• Say they have materials left over from a previous job.
• Pressure you for an immediate decision.
• Ask you to pay for everything up front, or only accept cash.
• Ask you to get the required building permits.
• Suggest you borrow money from a lender they know.

That last one can be the most costly. The FTC describes a home improvement loan scam: the contractor offers to arrange financing, then rushes you to sign papers, sometimes blank ones. Later you discover you agreed to a high-interest home equity loan, and the work isn’t done right or isn’t finished.

EXAMPLE — SCAM

Today 9:15 AM●●● ▮

Incoming call (405) 555-0117

Caller: Morning! We’re the crew doing the roof two streets over, and we’ve got enough shingles left to do your whole roof today at half price. I noticed some lifted shingles from the road — that’s how leaks start.

Caller: Deal’s only good while we’re in the neighborhood. If you can do $4,000 cash up front for materials, we’ll start this afternoon. No need for permits on a job this size.

How do you check a contractor?

Before you hire anyone, the FTC recommends:

1. Choose licensed, insured contractors. Check with your state or county government to confirm the license, and ask for proof of insurance.
2. Get recommendations from people you know and trust.
3. Check for complaints with your local Home Builders Association and consumer protection officials. Search online for the company’s name with words like “scam,” “review” or “complaint.”
4. Read reviews critically, using rating sites you trust.
5. Get multiple estimates. A written estimate should describe the work, materials, completion date and price. Don’t automatically take the lowest bid, and ask about big differences.

What should a written contract include?

The FTC says to ask for a written contract even if your state doesn’t require one. Before you sign, make sure it includes:

• The contractor’s name, address, phone number and license number.
• An estimated start and completion date.
• Every promise made in conversations about the scope of work and the cost of labor and materials.
• A written statement of your right to cancel within three business days, if you signed the contract in your home or anywhere other than the seller’s permanent place of business.

Make sure every blank space is filled in. Never sign a blank contract.

How much should you pay up front?

Never the full amount. The FTC says some states limit how much a contractor can ask for as a down payment, so check with your state or local consumer agency. Don’t make the final payment until the work is done and you’re satisfied.

Pay in a way that leaves a record, and avoid anyone who insists on cash. After a disaster, the FTC adds that scammers may insist you pay by wire transfer, gift card, payment app, cryptocurrency or cash. Those are red flags.

What should you watch for after a storm?

The FTC warns that unlicensed contractors and scammers often appear in recovery zones after hurricanes, wildfires and tornadoes. Signs of a scam include:

• Claims that they don’t need a license to do the work.
• A “discount” only if you sign right away.
• Asking you to sign over your insurance check. Instead, the FTC suggests arranging with your bank or credit union for a Certificate of Completion, so the bank pays the contractor for each stage of the job after you approve it.
• Offers to help you qualify for FEMA relief for a fee. The FTC says FEMA doesn’t charge application fees.

If you paid a contractor who disappeared, report it to your state attorney general and local consumer protection office. Find yours on our where to report a scam page. If you paid by card or bank transfer, call your bank, and see our first-hour checklist after a scam.

Scammers who knock on doors often call, too. See our guide to phone scams, and if someone pressures you for gift card payments, read gift card scams.