How to spot a post-storm home contractor scam

After a damaging hurricane, there are often weeks of cleanup and recovery. From patching roofs to hauling away debris, the tasks can be overwhelming for many homeowners. 

Some people use the time after a storm as an opportunity to take advantage of homeowners who are desperate to make repairs and clean up. VERIFY reader Anindyo reached out to ask about a potential home repair scam, after a contractor reached out to them about fixing their roof shortly after a hurricane.

THE SOURCES

• Federal Trade Commission

• Better Business Bureau 

• National Council on Aging

• National Insurance Crime Bureau

• AICPA Member Insurance Program

• Ohio Emergency Management Agency

WHAT WE FOUND

Contractor scams are fairly common, especially after storms or natural disasters, and can take a variety of forms. Some bad actors take money without doing any work or offer discounted work up front, only to charge more money before completing the project. 

For example, after a storm, a scammer calls or stops by “offering affordable repair services to all your neighbors, claiming that if you use them, you can get reimbursement through your homeowners’ insurance,” the National Council on Aging says. Then, they take a deposit from you but never complete the work or coordinate with your insurance company.

The Better Business Bureau warns of a scam where a bad actor convinces homeowners to sign over their insurance payments after a natural disaster for work that is never completed.

“Don’t sign any documents that give the contractor rights to your insurance claims. Be sure to read any documents or contracts carefully before signing them,” the Bureau says.

“Although it is not unusual for reliable contractors to come to your door to advertise their services after severe weather, some may not be legitimate,” Ohio Emergency Management Agency says. It's important to be able to spot potential red flags to avoid being scammed. 

Contractor scam red flags

The Federal Trade Commission, Maryland Office of the Attorney General Consumer Protection Division and the National Council on Aging list several things to watch for before signing up with a contractor. They include contractors who:

• Claim to have leftover materials from a different job

• Pressure you for an immediate decision

• Require everything paid upfront

• Offer a massive discount without specifying the final price

• Claim they can help you qualify for FEMA relief, at an extra cost. FEMA does not charge application fees, so this is a scam. 

How to tell if a contractor is legit

To avoid falling for a contractor scam, it's important to do your research. The Federal Trade Commission, National Council on Aging and AICPA Member Insurance Programs provide guidelines on checking the legitimacy of a contractor. You should:

• Ensure a contractor is licensed and insured before approving them for work. Proper licensing is needed for protection against property damage and other fees, however, each state has its own licensing requirements for contractors to follow. Most states, including Maryland, California and Arizona, have online databases that allow you to search for a specific contractor.

• Ask for proof of any required building permits.

• Check with the local Home Builders Association and consumer protection officials and search for the company with words like “scam” or “review” to see about any potential complaints.

• Get a written estimate and contract up front with an agreed payment schedule that includes final payment upon completion. 

• Don’t pay for a bid and instead get estimates from other contractors to make sure the quoted price is a fair one. “Stay away from contractors that ask you to pay for their bid and be sure to get a few different estimates” and “if you don't understand the language, or if the contract is open-ended or ambiguous, don't sign,” AICPA says.

Where to report a contractor scam

The Federal Trade Commission recommends trying to work things out with the contractor first, if possible. Make sure to “follow any phone conversations with a letter you send by certified mail. Request a return receipt, so you can prove that the company got your letter. Keep notes and copies of letters and documents for your files,” the Commission says.

If things can’t be resolved with a contractor, the Federal Trade Commission recommends reaching out to the local consumer protection office or home builders association.

Scams can also be reported on the Better Business Bureau’s scam tracker.

Post-storm home repair resources

FEMA’s Disaster Housing Program provides grants to help people pay for minor home damage after a severe weather event. Also, the U.S. Small Business Administration provides “low-interest loans of up to $200,000 to homeowners to repair or replace their primary residence,” according to the FTC.