Home Improvement Scams

As sure as spring arrives in Wisconsin, it is sure to bring transient home improvement workers and scams.  These rip-off artists will probably hit your town.  Transient contractors specialize in blacktopping driveways, painting, and yard work.  Their work and materials are usually inferior and they are likely to steal from you.

Many homeowners are targeted by scam artists who use high pressure tactics to sell unneeded and overpriced contracts for "home improvements." Often these scam artists charge more than their quoted prices or their work does not live up to their promises. When the homeowner refuses to pay for shoddy or incomplete work, the contractor or an affiliated lender threatens foreclosure on the home.

Deceptive Sales Tactics
Shady home improvement contractors may use several methods: high pressure phone calls, flyers, advertisements, and door-to-door sales.  Unscrupulous contractors often employ one or more of the following sales tactics: 

• "bait and switch" - offering low prices for installed items like windows and home siding, and then telling the homeowner the item is out of stock and can only be replaced with a high-priced substitute;

• misrepresenting the urgency of a needed repair;

• claiming the item is more expensive than advertised because it has to be "custom made" to fit the home; 

• misrepresenting that the consumer is receiving a discount because the home is selected to model the repair when, in reality, the consumer is paying market price or more;

• misrepresenting the energy savings, health benefits, and value added to the home;

• misrepresenting the terms on which financing is likely to be arranged.

Deceptive Financing Schemes
Unscrupulous contractors often use deceptive tactics to hide the true cost of paying for the work.  These tactics may include:

• using more than one contract for a single repair in an attempt to confuse the home owner;

• claiming that there is a "cash" contract that doesn't contain financing terms although the deal is intended to be financed;

• adding extra hidden charges above the negotiated price;

• providing expensive (high rate) financing or arranging with a third party to finance the work;

• obtaining hidden kickbacks from lenders or loan brokers for referrals.

Tips on Hiring Contractors
Most contractors involved in home improvements are honest, reliable and skilled, but some are not.  Here are suggestions on how to find good contractors.

• Decide in advance what the job will involve.  Draw sketches and clip pictures to show to prospective contractors.

• Get more than one estimate.  Make sure all contractors are bidding on exactly the same work.  Make sure the contractor comes to the job site rather than giving a telephone estimate.  Be leery of an extremely low estimate.

• Ask for names of the contractor's recent customers and cell to see if they are satisfied.  Did the contractor show up on time, clean up afterward, perform follow-up service?  Would they hire the contractor again?

• Contact the Bureau of Consumer Protection, 1-800-422-7128, and the Better Business Bureau, 1-800-273-1002, to find out if complaints have been filed.

Contractor Requirements
A contractor must inform you, before you enter into a contract, of all required building and constructive permits.  Contractors must register with the Division of Safety and Buildings, showing proof they paid for worker's compensation, unemployment insurance, and minimum levels of liability or a bond.  The liability insurance covers worker and public injuries and damage to property.

If the contractor can't show you a registration card, it may mean trouble if you hire them.  Some contracts are written to put the responsibility for building permits and insurance on the homeowner.  By the homeowner taking out the building permit, you have no assurance that the contractor has proper insurance.

Consumers may ask any contractor for a certificate of insurance with the homeowner's name and address listed as a certificate holder.  this certificate shows that the contractor has an active policy.

Contracts
Don't rely on oral agreements.  For the protection of both you and the contractor, it's wise to request a written contract in all situations.  The contract serves as a statement that the contractor knows exactly what services you want performed.  Don't sign anything until you know the meaning of it all.

Make sure the contract contains:

• The name and address of the salesperson, as well as the company name and address (not just a post office box number).

• A full description of the job.

• A detailed list of materials to be used including the name, brand, size, models, performance capacity, and quantity of materials to be used.

• The total price, plus any finance charges.

• A starting and completion date, to prevent the job from going on indefinitely.

• A statement explaining any warranties on materials, labor or services.

If any payment is required before the work is done, a written contract is required by law.  The consumer should demand one of the contractor doesn't offer it.  Never sign a completion certificate or make final payment until you are satisfied and all work is done as specified.

Lien Waivers
When any payment is made, especially final payment, get lien waivers from the contractor.  This will prevent a subcontractor or material supplier from putting a lien on your home if the contractor doesn't pay the bills.

Right to Cancel
If you were solicited and signed a contract for more than $25 at your home, Wisconsin law allows you three business days to cancel.  The contractor is required to provide you with two copies of the notice of your right to cancel at the time the contract is signed.  To cancel the sale, the consumer must sign and date a notice of cancellation and mail it to the contractor before midnight of the third business day.  Sending cancellation notices by certified mail, return receipt requested, lets you know your notice was delivered.

(posted 4-4-08)