Buzz
Anyone can fall victim to a scam, even those who consider themselves savvy. It’s easy to be tricked when our desire for goods and services collides with the need to get a great deal. Scammers know how to prey on that vulnerability.
Homeownership comes with its fair share of expenses, making homeowners prime targets for scammers. Hiring contractors, a process that’s often stressful and complex, can lead to falling victim to scams. Even though we approach these situations with caution, around 10% of Americans have experienced a contractor scam, losing an average of $2,426. If you think scammers are easy to spot, it’s probably because you haven’t fallen for one—yet.
Damage to the driveway
The scam: You hire a contractor to repave your driveway—maybe they came to your door with an irresistible offer, or perhaps you found them after some online research. Either way, they start the job and begin ripping up your old driveway. Once it looks like the surface of the moon, they drop the bombshell: the final price will be double the original quote—or even higher. If they’re being courteous, they might give you some excuse for the hike, but in the end, you’re stuck: pay the inflated price or be left without a driveway.
Why it’s easy to fall for: It’s shockingly bold. Holding your house hostage like this is a completely unexpected tactic, but they know that once your driveway is destroyed, you’re left with no choice but to hire a second contractor at an even higher price.
More materials, more complications
The scam: A contractor shows up at your door and claims they’re working nearby with leftover materials. To make their time in the neighborhood worthwhile, they offer to do work at your home for a significantly reduced price since they already have the supplies. After agreeing on a reasonable deposit, they either vanish or spend a day doing poor-quality work, leaving you with a mess.
Why it’s easy to fall for: Like most scams, it blends a plausible situation with your natural urge to save money. Plus, having a friendly stranger at your door makes you feel at ease, as if you’ve made a genuine connection.
The "too good to be true" offer
The scam: A contractor presents you with an amazing deal on a project, but only if you sign a contract and pay a deposit right away. Once you agree, they vanish and never return to complete the work.
Why it’s easy to fall for: The pressure of urgency is a classic psychological tactic employed by scammers. It works by triggering an instinctual response in our brains that pushes us to make snap decisions we wouldn’t otherwise consider. This is why many people feel disbelief after falling for a scam like this—once the pressure is gone, we can think more clearly again.
Blatant insurance fraud
The scam: When you tell a contractor that you can’t afford a project, they offer a solution: insurance. They claim they can get your insurer to cover the costs—just let them manage the process. What follows is either outright insurance fraud, where the contractor fabricates a covered event, or they file a claim, take the payout from the insurer, and never complete the job.
Why it’s easy to fall for: Contractor scammers often come across as helpful friends, and it’s not unusual for legitimate contractors to handle insurance matters on behalf of homeowners. It’s always wise to be involved in any communication between your contractor and your insurance company, and to verify any claims made by the contractor regarding coverage.
My friend the loan officer
The scam: We’ve all had that gut-dropping moment when a contractor hands us a quote that seems astronomical—but then, this contractor has a solution. They introduce you to a lender they regularly work with, who offers a great rate to finance the project. Plus, they promise a discount if you use this lender. What you don’t realize is that the contract you sign with this ‘lender’ actually takes out a home equity loan on your property—and the contractor disappears.
Why it’s easy to fall for: Financing home repairs and renovations is common, but the paperwork can be a headache. When a contractor makes it feel effortless, we often appreciate the convenience and might skip the research we should’ve done.
Free inspection, but at what cost?
The scam: A contractor appears at your door, offering a free inspection of your home. They might claim they’ve noticed from the street that your roof, windows, or HVAC system looks worn down. Miraculously, they uncover an urgent problem—sometimes even causing damage themselves to force you into hiring them. After collecting a deposit, they vanish under the pretense of gathering materials, never to be seen again.
Why it’s easy to fall for: A free inspection seems harmless—you assume you can just take their findings and shop around for the best deal. What you don’t anticipate is the high-pressure situation when they suddenly ‘discover’ an alarming issue that requires immediate action. You’re certainly not expecting, say, a roofer to descend from your roof clutching shingles they intentionally tore off.
Ways to safeguard yourself from contractor scams
Because scammers prey on human nature and cognitive biases, anyone can be deceived—but there are proactive steps you can take to reduce your risk:
Do your homework. Never hire a contractor without thorough research. No matter how trustworthy they seem in person or how professional their quote appears, always verify their credentials. Ask for their license and insurance details, then check your state’s licensing board to confirm legitimacy.
Additionally, request references and follow up to ensure they have a solid track record of completing projects and satisfying customers. If they can’t provide references or you can’t verify their past work, consider it a red flag.
Avoid signing on the spot. If a contractor pressures you to sign a contract or put down a deposit immediately to ‘lock in a deal,’ walk away. Even if it’s a legitimate business, high-pressure tactics are a bad sign.
Be cautious with deposits. Many contractors require an upfront deposit, and amounts between 10% and 33% are generally reasonable, depending on the project’s total cost. However, excessive deposit requests should raise concerns, as you need some leverage if things go sideways. Also, check your local regulations—some states cap the deposit amount contractors can legally request.
Avoid cash payments. If a contractor insists on cash, consider it a warning sign. Credit cards provide fraud protection, though some contractors avoid them due to fees. Checks are a better alternative to cash since they create a paper trail.
Secure your own financing. Just like you wouldn’t blindly accept a car dealer’s financing offer, you should explore your own loan options for home improvements. Relying on a contractor’s ‘recommended’ lender could put you at risk of financial exploitation.
Trust your instincts. Reputable contractors provide detailed project plans, transparent pricing, and allow you time to evaluate and ask questions. If you feel rushed, confused, or pressured, take a step back—even if their pitch sounds convincing.
If you’ve fallen victim to a contractor scam
So, what do you do if a smooth-talking scam artist catches you off guard, takes your money for a repair or project, and then never follows through? Here are a few essential steps to consider:
Report it to the authorities. File a report with your local police department. Even if the scammer is never identified or caught, having a formal record could help if you need to file an insurance claim. Also, make sure to contact your state's Attorney General’s office and file a report with them.
Seek legal advice. If you can track down the scammer and have evidence of the scam, you might be able to pursue legal action. Consulting with a lawyer can help you understand your options and what steps you could take next.
Notify your insurance company. Your homeowners insurance may cover part of your loss, and if the scammer caused any damage while carrying out their fraudulent work, there could be coverage for that too. Speak with your local insurance agent to understand your options.
Consult a legitimate contractor. Just because you were scammed doesn’t mean your home doesn’t need repairs. Scammers sometimes damage property during their “work” or may do a subpar job. Don’t let your financial loss be the final issue—hire a real contractor to assess any genuine work that still needs to be done.
