Finance Globe

U.S. financial and economic topics from several finance writers.
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FTC: Avoid Home Repair Rip-Offs

As Hurricane Irene slams into the East Coast and leaves damage and destruction in its wake, the government warns consumers to be alert for potential scams.

Crooks often take advantage of natural disasters to prey upon people who need repairs done to their homes - during a time when the demand for qualified home repair contractors is likely to exceed the supply. Homeowners and landlords may find that every legitimate contractor they call is booked for months - paving the way for a contractor who knocks on their door and promises the desperate property owner to get their property back in shape.

This is the perfect opportunity for the home-repair scam artist who may overcharge and tack on hidden fees, do poor quality work, or skip town after taking the money but before the repairs are complete.

And getting ripped-off doesn’t just happen through intentional scams. Someone knocking on your door may be a well-intentioned worker who simply is inexperienced and ends up doing a sub-par job, or someone who may be trying to make a little extra money on the side and won’t get the job done within a reasonable time.

The Federal Trade Commission (FTC) and the Federal Emergency Management Agency (FEMA) advises consumers to take these steps to avoid property repair rip-offs:
  • Deal only with licensed and insured contractors and verify track record of anyone you’re thinking of hiring. Ask for a list of recent customers and call them.
  • Get recommendations from friends, relatives, neighbors, co-workers, insurance agents or claims adjusters. Also check with the local Better Business Bureau and Home Builders Association to see if complaints have been lodged against any contractor you're considering.
  • Take your time about signing a contract. Get a written estimate that includes any oral promises the contractor made. But remember to ask if there's a charge for an estimate before allowing anyone into your home. Ask for explanations for price variations, and don't automatically choose the lowest bidder. Get a copy of the final, signed contract before the job begins.
  • Resist dealing with any contractor who asks you to pay for the entire job up-front. A deposit of one-third of the total price is standard procedure. Pay only by check or credit card - and pay the final amount only after the work is completed to your satisfaction. Don't pay cash.
  • Be skeptical of contractors who encourage you to spend a lot of money on temporary repairs. Make sure there's enough money for permanent repairs.
  • Ask a knowledgeable friend, relative or attorney to review a home repair contract before you sign. If you get a loan to pay for the work, be cautious about using your home as security: If you don't repay the loan as agreed, you could lose your home. Consider asking an attorney to review the loan documents, as well.

If you suspect a repair rip-off, call the consumer division of your state Attorney General. If you suspect fraud, waste, or abuse involving Federal Emergency Management Agency disaster assistance programs, report it to FEMA's Inspector General's Office.

Federal Trade Commission
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Friday, 12 April 2024

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