5 common home improvement scams and how to stop them

ConsumerReports.org

Cops aren't the only ones who stage sting operations. For three months, representatives of the Connecticut Department of Consumer Protection posed as homeowners and requested bids from a series of contractors. Turns out 44 of them were working in the state illegally without the proper paperwork. This is just one of a growing number of home improvement scams highlighted in a new report from the Consumer Federation of America.

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Shoddy construction work or, in some cases no work at all, were just some of the complaints in the CFA's 2011 Consumer Complaint Survey Report, making homeowner scams the third most reported offense after automobile and debt-relief gambits. All in all, consumer protection agencies from 22 states last year recovered more than $147 million on behalf of scam victims. Here are some of the cases cited in the report.


1. The sting thing.
In the case of the Connecticut sting, workers from such nearby states as Pennsylvania and Rhode Island were bidding on jobs without having registered in Connecticut.

Tip: Before hiring a contractor, ask your state or local consumer agency if there are licensing or registration requirements and then check to make sure the contractor has complied with them.

2. Money for nothing. After a Florida teacher gave $18,000 to a contractor to build an addition on her home, he closed up shop and left the country without doing any work. Florida investigators tracked him to Asia and then, via Facebook, to California where he was arrested and extradited to Florida. Good news, the teacher got her money back.

Tip: Pay only a small deposit when you contract home improvement work. Some states limit the amount of money that can be requested upfront. Get a written contract that sets out a payment schedule and milestones for completion of the work. Never pay the full amount before the job is done.

3. Driveway drama. Asphalt scams spread in the summer. Here's how it works. An itinerant worker shows up at the door, saying he "was just in the neighborhood." After convincing the homeowner that the driveway needs repair, and getting the money upfront, the workers sprays a substance on the driveway that isn't asphalt, tells the victim not to use the driveway for 48 hours and disappears.

Tip: Don't hire pavers, painters or other workers who show up uninvited at your door. Any work they perform is apt to be subpar. The CFA recommends that you get the worker's license plate number and call the police with a description of the vehicle.

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4. How alarming. Unsolicited sellers of home security systems may also come knocking. In one case, a 95-year-old Florida woman was convinced to sign a five-year-contract for $3,300 even though she already had a service contract with another company.

Tip: Under federal law, door-to-door purchases of $25 or more can be cancelled within three business days. Some states also require such salespeople to be licensed.

5. A free audit can cost you. Consumers are complaining about "free" home energy audit solicitations that come by mail or phone. In one case, a homeowner was pressured into opening a $5,800 line of credit so the contractor could install an "energy efficient radiant barrier used by NASA." The work was never completed but the homeowner was able to close the credit line.

Tip: Some utility companies offer free energy or weatherization audits but typically they include such information with your utility bill. If someone claims to represent your utility company, check to confirm that it's true.


Copyright © 2006-2012 Consumers Union of U.S., Inc. No reproduction, in whole or in part, without written permission.

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