Home Improvement Scams: Expert Tips to Protect Yourself When Hiring Help for Repairs

Whether you’re doing a home remodel or repairing something in your house, hiring outside help can often be a stressful process. It’s even more difficult when you have to weed out shady contractors who are looking to get as much money as possible using unethical or even illegal practices. Though fraud involving home repairs is unfortunately quite common, there are ways to ensure your money doesn’t end up in the wrong hands. Below you’ll find information about types of home improvement scams, red flags to watch for and what to do if you’ve been a victim.

6 common home improvement scams to watch out for

Pay in advance scam

One of the scams that many find themselves dealing with is when a contractor insists on getting large cash deposits (at least 50 percent in most cases) or even the entire payment before doing the agreed-upon project.

“Once paid, they vanish, perform minimal/nonexistent work, or use the funds for other purposes,” says Denis David, Home Alliance membership concierge.

It’s normal to have to make at least some of the overall payment up front, but amounts that seem suspiciously high can be an indication that the person is trying to take advantage of you.

“While contractors do often require an initial deposit in order to procure materials and pay laborers, it should only be a fraction of the project cost and should only be done after a contract is signed,” adds Thomas Borcherding, owner of Homestar Design Remodel and a seasoned home improvement sales expert.

Bait and switch scam

Unlike the pay-in-advance scam, this one works by asking for suspiciously too little money. Experts say that the shady contractor or remodeling firm will provide an incredibly low bid for the project up front. This is done to secure the sale and beat out the competition.

Then, as the project continues, unforeseen problems will come up that require more money for completion. Often, the company will refuse to do any more work until you pay more. In the end, you’ll spend more than what was agreed upon initially and exceed the original promised, market rates.

This is particularly common with unclear contracts that don’t explicitly spell out the cost for you. If you don’t pay that higher amount, scare and intimidation tactics will be employed to get you to do so.

The ‘never-ending problems’ scam

These scams involve people showing up at your front door, equipment ready, pointing out an issue with your home, explains Whitney Joy Smith, investigator, founder and CEO at Smith Investigation Agency. “They might say they were working on a neighbor’s home and, out of the goodness of their hearts, wanted to offer their services to you. They might even say they’re giving you a discounted rate.”

What usually happens next is that the contractors do seem to fix something per their promise, but it’s done in a fast timeline and with poor quality work.

“There might not even have been anything to fix, but they’ll mumble off technical terms and tell you what they’ve fixed when, in reality, nothing has really been done,” adds Smith. “After that, they might come up with another ‘problem’ they found—maybe this is a bigger, more expensive problem—but they’re willing to fix it now.”

There are two other similar scams to watch for that resemble this scheme:

1. When contractors go door-to-door say they’re offering a special discount for all work done in the same neighborhood. “They pressure for immediate decisions, often resulting in shoddy work, incomplete jobs or outright disappearance,” explains David.
2. Contractors claim the leftover materials they have from another nearby project can get you massive savings. “The materials are usually subpar or stolen, and the work is rushed and defective,” adds David.

Life

Home Title Theft Scams Are Rising—Here’s How To Protect Your Property

While many scams are focused on collecting money or information through fake websites and suspicious emails, others involve a much larger target: property. Officials have recently been warning both residents and real estate agents in cities around the country to be alert for “title pirates.” This concerning scam can affect anyone who has ownership of […]

Storm-chaser scam

Because many people are desperate to repair their homes after a severe storm or natural disaster, it’s the perfect opportunity for bad actors to take advantage.

“A ‘storm- chaser’ is a residential remodeling professional that visits an area affected by severe storms in order to capitalize on potential damage in the area, typically taking the shape of roof salespeople,” explains Borcherding.

He does add that while not all storm-chasers are scammers, some are looking to take initial deposits and flee.  

Permit-dodger scam

 Some contractors might find legitimate ways to cut costs to secure business, but it’s a good idea for you to be mindful of what steps they are taking to do so. One red flag: The company or individual contractor suggests skipping permits to save both time and money.

 “This illegal practice leaves you liable for fines, unsafe work, and problems during future home sales or insurance claims,” cautions David.

 The fake contractor scam

Equally as concerning as the “permit-dodger” is the scammer who lacks legal credentials—they may be operating without a valid license or use a forged or fake business name, says David.

Because they don’t have the needed skills for the job, you could end up paying even more money down the road to get things fixed properly. They also usually lack proper insurance, which means you’re at financial risk for any injuries or damage that occurs to/on your property.

5 home repair scam red flags

Though some of these scams may be more obvious than others, experts say there are usually clues that can indicate you’re being targeted in one.

Here are some signs of potential home repair scams:

• Business name changes: “Be on the lookout for firms or individuals who say they ‘operated under a different name,’” cautions Borcherding. “A contractor or installer may change their name due to litigation or due to a client that took it upon themselves to make that person’s unethical practices known.”
• High-pressure tactics: “Any contractor who pressures you to act immediately or sign the contract right away isn’t just being pushy – it’s one of the hallmarks of a scam,” shares home improvement expert Jim Marino, CEO at Pinnacle Home Improvements. Even if the person has a legitimate business, it’s still worth looking elsewhere, as shady tactics are considered unethical.
• Lack of a paper trail: The contractor should be willing to provide fully detailed, written contracts and references upon request, as well as legitimate licensing and insurance credentials. Otherwise, they may have something to hide.
• Lack of an online presence: “If you have trouble finding a person or company online then there’s a real possibility they are illegitimate,” says Borcherding. Similarly, having no business cards, a lack of physical mailing address or utilizing unmarked vehicles could indicate a sketchy company.
• Permit issues: This may involve advising against permits, offering to pull them for you illegally, or starting work before permits are secured, shares David.

Life

Mail Theft Check Fraud Is Surging—Here’s How to Protect Yourself

Though only 61% of Americans wrote a check in the last year according to a 2024 survey, officials are still warning people about crime trends related to paper checks. It’s easy to see why; two men in Michigan were recently charged for stealing checks believed to be worth more than $1 million in total. Wondering […]

What to do if you’ve been scammed by a contractor 

If you suspect that you’ve been victimized in a home improvement scam, you’ll want to act quickly to protect your finances. First, stop paying the scammers immediately, cease all communication with them and contact your financial institution. If you’ve paid by check and it hasn’t been cashed, you can instruct the bank to perform a “stop payment,” according to Borcherding. For debit/credit cards you can dispute the charges immediately.

Next, compile all the documentation you have related to the project and the contractor/company. 

“Gather contracts, estimates, receipts, canceled checks, bank statements, emails, texts, call logs, photos/videos of the work (or lack thereof) and notes on conversations (dates/times/details),” advises David.

That documentation can be used to report the scam to:

1. Law enforcement
2. The County/City Consumer Protection Office
3. Local Building Department/Code Enforcement.
4. State Attorney General’s Office
5. State Contractor Licensing Board.
6. Better Business Bureau (BBB)
7. Federal Trade Commission (FTC)

It’s also a good idea to leave reviews when possible to warn others. “Even if your money can’t be recovered, it’s still important to report the fraud so that other people don’t fall victim to the same scammers,” adds Smith.

If you’ve lost significant money in the scam, you can consider litigation—but it can be a long and stressful process, warns Borcherding. For smaller amounts, you can utilize small claims courts to get your money back. (Note: Larger amounts, ranging anywhere from $2,500 to $25,000 depending on the state, may require the use of an attorney.)

How to protect your finances from home repair fraud

Recognizing potential red flags of home improvement fraud can help ensure you don’t become a victim the next time you need work done at your house. Follow these tips that experts say will help protect your finances:

1. Conduct thorough online research of the company, including searching for complaints.
2. Get multiple quotes (at least three) for the project.
3. Ask for references.
4. Demand a detailed, written contract.
5. Confirm with state licensing boards.
6. Avoid large cash payments and use credit cards when possible.
7. Insist on permits.

Deal of the Day

This Deep Conditioning Collagen Hair Mask for Has 4.9 Stars and Is 80% Off — Get It for $20! View Deal

Finally, trust your gut! If an offer, timeline or price seems too good to be true—it very likely is.