Home Repair Fraud

Each year, Americans spend billions of dollars for goods and services they never receive or ones that are poor quality. Many of those dollars are misspent simply because consumers made poor decisions. But consumers also lose billions of dollars each year because of fraud.

People who are victims of a disaster are often "ripe pickings" for consumer fraud, as they may not be thinking as clearly because of stressful conditions.

What You Should Know About Consumer Fraud

Legally, fraud is the intentional misrepresentation of an important fact made to influence the buyer. However, it can be difficult to prove the misrepresentation was intentional. Also, it is often difficult to catch sellers who use fraudulent methods because consumers who have been the victims of fraud don't like to admit it.

There are seven general warning signs of fraud. One or more of these warning signs is usually present in any fraudulent situation. The warning signs are:

• An offer of something for nothing, or free merchandise.
• Pressure to act now.
• An offer of a kickback (a lower price or reduced fee) for referring potential clients.
• A seller who criticizes his/her own merchandise or another seller's merchandise.
• A contract with vague or tricky wording.
• The seller's spoken promises are different from the contract.
• Exaggerated claims or lavish promises.

Let's look at some specific fraudulent schemes you should be cautious of:

• Home Improvement Frauds - usually target roofing, furnace or driveway repairs. To avoid becoming a victim, never pay in cash. Be careful of people who want all the money before the work has been completed. Ask to see the state licenses of plumbers, electricians, carpenters, and general contractors. Get written estimates from at least three reliable contractors. The written contract should include the costs of products and labor, the quality of materials used and the start-up and completion dates. Be sure to obtain the following from the contractor before construction begins:
• Waiver of Lien - states that the contractor has paid all debts (materials and labor) related to your job.
• Certificate of Liability Insurance - verifies that the contractor carries liability insurance.

Also be aware that:

• Uninsured workers may have the right to sue if they are injured on your property (i.e., if a floor caves in or a wall collapses). Unskilled workers doing electrical or structural work may pose a serious, even life threatening, risk to the tenants of the structure. A felled tree may cause damage to your property (or your neighbor's) and you are liable.
• All electrical, plumbing, structural work, and tree removal services should be performed by a licensed, insured, and experienced worker.

Consumers can and should protect themselves against fraud. Consumers are their own best first line of defense to protect themselves against consumer fraud. To avoid becoming a victim of fraud, consumers should:

• Take the time to think through decisions.
• Not allow anyone to rush them into a "deal" or signing a contract.
• Always get a written contract.
• Shop around. Get more than one estimate and/or ask a trusted friend to review the options before deciding.
• Politely but firmly say "no" to situations that appear suspicious.
• Exercise their consumer rights. Be wary of door-to-door repair solicitors.
• Make final payment when the work is completed to satisfaction.
• Review how their family will handle the situation of someone coming to their door to sell a home repair or remodeling service. If everyone knows what to do, it will help prevent housing-related consumer fraud.

Usually, you can't legally cancel a contract without penalty after you've signed it. In a few specific situations you can:

• If you buy merchandise from a door-to-door salesperson in your home, you have three business days (including Saturday) to cancel the sale if the price is $25 or more. To receive a full refund, complete the Notice of Cancellation the salesperson gave you within three business days and return the merchandise.

You do not have any automatic rights to cancel agreements you made in phone sales. The only cancellation rights you have are those promised to you by the seller.

The Federal Trade Commission (FTC) enforces antitrust laws, acts to curb deceptive advertising, packaging and selling, and even over-the-phone swindles. Complaints should be sent to:

The Idaho Office of the Attorney General is charged with protecting Idaho consumers against fraud and prosecuting those who practice fraud:

The Better Business Bureau can tell consumers if it has received complaints against sellers and can help consumers to resolve problems with sellers:

Alert consumers can protect themselves and others from becoming victims of fraud if they look for the warning signs and notify the authorities if they spot fraud. It is important that consumers learn to ask the right questions and think before acting.

Adapted from Hunts, H. J. (1994). Consumer fraud. Urbana: University of Illinois Cooperative Extension Service, and Fugate, M. A., Myatt, D., Cude, B.