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How to steer clear of contractor fraud

Choosing a contractor to perform construction or repair work is a big decision - especially for large projects with substantial budgets. Unfortunately, scams do exist in the construction industry. Although regulations strive to protect consumers from fraud, it still happens at alarming rates.

Five years after Superstorm Sandy ravaged the East Coast, fraud charges are pending against more than 200 contractors with claims totaling $11 million. In one case, the contractor failed to pull the right permits, didn't have adequate insurance and bailed on the project partway through. The unfortunate homeowners were out thousands of dollars and unable to live in their home.

These cases are a sober lesson in how unscrupulous contractors try to take advantage of desperate homeowners (and condo owners) in the wake of natural disasters. For Florida residents impacted by Hurricane Irma, it's all the more important to choose a contractor with care.

What to watch for

Contractor fraud can take many forms, including:

  • Misrepresenting their credentials: Only hire contractors who are licensed and insured. You can search online through the Florida Department of Business and Professional Regulation to ensure that the contractor's credentials are up to date.
  • Taking large deposits and then vanishing: In general, don't pay more than ten percent (or up to $1,000) upfront, and don't pay cash.
  • Making sweeping promises they can't fulfill: If the bid seems too good to be true, it probably is. The contractor may be trying to cut costs by using subpar materials or neglecting to pull the right permits. Or they might initially bid low and then find reasons to jack up the fees later - for example, claiming unforeseen complications or pushing for exorbitant change orders. You should always solicit multiple bids and look closely at outliers. Additionally, never rely on verbal agreements; get everything in writing.

The best way to avoid contractor fraud is to do your homework upfront. Even licensed contractors might not be entirely above board. Before signing anything, make sure you check references, ask to see examples of their work and consider having an attorney review the contract for any red flags.

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