The Congletons of North Texas had finally secured the financing needed to build their next house. Jeremy, his wife, and their two daughters couldn’t wait to move in. After spending $250,000 of their hard-earned money, the family of four was bankrupt, living in a camper, and no closer to living in their dream home.
The culprit? A married couple with a polished social media presence who falsely claimed to be architects and remodelers. Once they took the Congletons’ money, they didn’t start work immediately and became increasingly hard to contact.
As shocking as it is, this story of home improvement fraud isn’t uncommon.
Summertime is Prime Time for Contractor Fraud
During winter, when most people are stuck at home, they start to notice projects around the house that need to be completed sooner rather than later. When the weather starts to improve, many homeowners begin calling contractors.
With this increase in remodeling activity comes more chances for home improvement or home repair scams.
Recent statistics show how devastating these schemes can be for ordinary homeowners:
- U.S. consumers reported 81,925 home improvement scams in 2024 (the most recent data).
- Nearly one in 10 Americans has experienced a home improvement scam.
- The median monetary loss for home improvement scams in 2024 was $1,800, according to the Better Business Bureau. Out of 27 scam categories, home improvement’s median loss was the fourth-costliest.
6 Signs of Contractor Scams
The first line of defense against home improvement scams is recognizing the signs of a dishonest contractor. Below are five signs you should watch out for this remodeling season.
- The contractor claims to have a limited-time deal for work that is heavily discounted due to having leftover materials from a previous job.
- They want you to compensate them in cash, prepaid debit cards, or other hard-to-trace payment methods.
- The contractor wants more than a third of the project’s overall payment up front.
- The remodeler insists that you finance the project through a “friend” of theirs or some other mysterious lender.
- The contractor or remodeler intentionally performs low-quality work, which then requires homeowners to pay more money to fix the issues.
- The contractor refuses to provide proof of a license and insurance.
How to Verify a Contractor’s License and Insurance
Verifying a home contractor’s license and insurance coverage is perhaps the most important action you can take to prevent home improvement fraud.
Except for small home improvement projects, contractors must hold current homebuilding licenses and certifications. Some states require a license for every home improvement project, regardless of cost.
To confirm whether a contractor has a license, locate the database for your state’s general contractors. Alabama, for instance, offers an online roster search through the licensing board. Most states have these online resources, which let users search by license number or contractor name.
The contractor should also supply you with a certificate of insurance (COI). The COI verifies coverage of general liability and, usually, workers’ compensation.
Note that insurance coverage is not the same as a surety bond. Bonds, which can be general or project-specific, cover different kinds of losses. They’re more likely to compensate homeowners for home improvement fraud, although contractors who can obtain bonds in the first place are usually trustworthy.
Other Ways to Protect Yourself from Home Improvement Scams
Verify Basic Identifying Information
Before sending money, signing a contract, or sharing personal information, confirm that the contact details you received match official public records. A reverse phone or email lookup can help flag obvious inconsistencies.
Call the Better Business Bureau and Other Agencies
More often than not, trustworthy contractors are accredited with the Better Business Bureau (BBB). It’s worth checking out the BBB’s database before signing a home improvement contract. The National Association of Home Builders is another good resource for finding honest workers.
Ask About Past Projects
To ensure a contractor has experience doing the type of work you want done on your home, ask them about projects they’ve completed. Contractors with actual experience are typically forthcoming about their past work. Many of them can rattle off statistics about the number of jobs they’ve completed or the combined value of past projects.
Get a Second (or Third, or Fourth) Opinion
Legitimate contractors should have no issue with your getting multiple estimates on a home improvement project. If you find that a particular contractor’s quote is much lower than the competition’s or if they’re pushy for immediate payment, for instance, you may be dealing with a scammer.
Don’t Pay for Everything Upfront
Contractors who demand a bunch of money up front may be thinking of leaving town. The standard upfront fees for many contractors range from 10 to 30% of the total project cost. Smaller jobs or those that require custom materials may require a 50% deposit, though that is rare.
Always ask for itemized contracts to help you determine whether the upfront fee is reasonable.
Protect Your Most Valuable Asset this Summer
Home is where the heart is, and a broken heart can take years to mend. Staying vigilant with a simple people finder can save you a lot of headache and financial trouble.
If you believe a home improvement scam has already happened to you, please get in touch with your state attorney general and the Federal Trade Commission.
People search tools are not consumer reporting agencies and should not be used to determine eligibility for employment, contractor work, housing, credit, insurance, or any other purpose covered by the Fair Credit Reporting Act.
