How to Prevent Contractor Fraud

Dec 2, 2020 2 min read

If you’ve finally gotten around to renovating your kitchen or restoring a part of your house that was damaged by a storm, your contractor likely will become your best friend — at least for the duration of the job. But, just as friendships sometimes head south, so too can this relationship, often in the form of contractor fraud or contractor scams.

Unfortunately, it may be difficult to spot, but you can learn how to tell if a contractor is ripping you off — and, more important, how to not get scammed by a contractor in the first place. Here are five signs to look for to prevent contractor fraud.

Demanding Full Payment in Advance

As is the case with most large jobs, a deposit or down payment is a fair thing to ask from a customer. Also, a schedule of payment is fair to expect, but if a contractor asks you to pay upfront and in full, that’s a red flag worth paying attention to. If you pay them in full then find yourself unsatisfied with a portion or all of their work, there’s not a lot you can do to get your money back.

Refusing to Provide References

There are a lot of questions you should ask before hiring a contractor. Most importantly, you should ask to see their licenses and proof of insurance, and ask them to provide references — and then call those references! Anyone on the up-and-up will have those documents at the ready and, if their work is well-regarded, they will happily put you in touch with former clients. 

Saying You Don’t Need Permits

In all likelihood, you do need a permit to do any real work on a property. And, as it’s the contractor’s job to procure those permits, it should be a serious red flag if they dismiss the need for them. If your contractor is trying to get around this important rule and requirement, then it’s hard to think they’re not skimming or scamming in other areas, too.

Piling on ‘Extras’

If you get the feeling your contractor is acting more like a salesperson who is trying to add on to your project, then it’s likely that they are. A good contractor will listen to you and offer advice and recommendations on things you want as the project moves along, but they will not try to upsell you or add unnecessary or unwanted elements to your previously agreed-upon job.

Asking for Payments Before They’re Due

Being a contractor is an expensive business, but experienced and reputable ones know how to manage budgets and prevent major surprises in what they charge you. A scammer will take advantage of your position — is your kitchen unusable during the duration of the job? — while a professional will understand the hardship you’re facing while they’re on the job. Your relationship with you contractor should be one of agreement and understanding but, if it’s not, then that’s the biggest sign that this contractor isn’t for you.

If you believe you’ve been the victim of contractor fraud, contact the Better Business Bureau right away. Even better, get in touch with the bureau before making the relationship official to see what background it can provide on your contractor.


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If you have any questions about your homeowners coverage, connect with a Farm Bureau Agent. They can keep you and your home protected. 

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