When Contractors Can’t Be Trusted
When your home is battered by a storm, fire, or even a broken pipe or water leak, your life can be turned upside down. You rely on professional contractors to repair the damage, but some contractors are not worthy of that trust.
Contractor fraud is a big business that puts the money in the pockets of deceitful, or even fake, contractors. You are left with the clean up—financially, and sometimes literally, if these “professionals” leave you with an unfinished job.
We’re committed to building consumer awareness of current schemes and how to keep from falling victim. NICB created Contractor Fraud Awareness Week (CFAW) five years ago with this initiative in mind. Throughout the fourth week of May, insurers, trade associations, businesses, government agencies, and legislators join us to fight and drive awareness for contractor fraud.
Keep your family and your community safe. Make sure you can recognize contractor fraud, and how to avoid it.
What Does Contractor Fraud Look Like?
Contractor fraud comes in all shapes and sizes. While there are some good Samaritans who offer their help following a disaster, it is important to be cautious. Fraud may look like...
A roofing contractor who arrives at your door following a disaster
Hurricanes, tornados, and windstorms are especially frightening for homeowners, who may not know what constitutes serious roof damage that would be covered by insurance. So, when a roofing company arrives at the door offering a free inspection, it may feel like the answer to all your problems.
Those roofers, however, may be hopping from door to door throughout your neighborhood. They may ask you to sign an electronic document so they can begin the inspection process, but one of those forms that authorizes the repair may be an Assignment of Benefits (AOB) form, which allows them to submit the claims directly to the insurance company without your approval.
During their “inspection,” some fraudulent contractors may even create damage. While an insurance company can prove the damage was not caused by the storm, you may still be responsible for the repair since you technically authorized the work.
If a roofing contractor arrives at your door following a storm, be wary of their offers, and don’t sign anything unless you’ve thoroughly read the document and discussed it with your insurance company to be sure the services being provided are both necessary and covered by your policy.
An out-of-state contractor who arrives following a catastrophe
When major natural disasters happen, local contractors can be overwhelmed by their community’s needs. Out-of-state contractors travel to these areas to alleviate that burden, but unfortunately, this may inspire criminals to take advantage of these circumstances.
Similarly to roofing fraud, these fraudulent contractors appear at doorsteps, promising quick repairs. They may even claim to be from an aid organization such as FEMA, but it is important to know FEMA does not endorse individual contractors.
If you find yourself approached by an out-of-state contractor, don’t be afraid to say no. If you do consider working with them, always make a point to do your own research on their business.
A plumber running a water mitigation scheme
Water damage—whether from a leaking roof or broken pipe—can escalate into serious problems for your home. If you work with the wrong plumber, it can also cause serious problems for your wallet, as you may be caught in an organized ring to defraud homes and insurance companies.
Upon spotting water damage, you are completely correct to contract your home warranty company or a plumber. However, the wrong plumber may recommend a mitigation company, allegedly with a hefty referral fee. The mitigation company moves in with moisture readings and may suggest extensive recommendations to demolish and rebuild. They’ll then pressure you to sign documents, once again including the AOB form.
Remember: Do not sign anything without reading, and never blindly accept any recommendations. Additionally, be wary of third-party billing processes from water mitigation companies as that can be another signal of fraud.
Listen to one of NICB’s special agents, Audrey Mehler, discuss how these water mitigation schemes can wreck someone’s life as easily as water damage wrecks their home. [Video to be inserted]
Contractor fraud may also look like…
- A public adjuster who offers to work with your insurer and take a cut of your insurance benefits.
- A lawn or tree service who shows up to remove fallen trees or debris following a windstorm
- A contractor who volunteers to rebuild your fence after storm damage
You are Your Best Line of Defense
While most professionals genuinely want to support their community when a natural disaster strikes, you should always listen to your instincts. These prevention tips are your best line of defense against fraudulent contractors.
- Don’t be pressured into work—get at least three written estimates and compare bids
- Check the contractor’s credentials and the Better Business Bureau reviews that cannot be removed
- Never sign a document without reading it in full, and require copies of all invoices are sent to your insurer
- Work with your insurer to find a reliable contractor
Report Contractor Fraud Immediately
If you fell victim to contractor fraud, don’t feel ashamed. Roughly one in 10 Americans have fallen victim to a contractor fraud scheme. The best way to lower that number? Report it.
When you let your case fall through the cracks, you give professional criminals the greenlight to perpetuate these schemes again, and again, and again. Stop them in their tracks by reporting them to:
- Your local police department
- AARP Fraud Watch Network: 877-908-3360
- NICB: 800-TEL-NICB or nicb.org/ReportFraud
We encourage everyone to familiarize themselves with our fraud prevention tools, and if you hire a contractor, use our checklist as a guide to help you find the right company to repair your home or business.