Be Careful When Hiring Contractors for Disaster Repairs
Release Date: May 11, 2007
Release Number: R7-07-036
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GREENSBURG, Kansas -- Watch out for scam artists. That is the warning issued by officials of the U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA) and the Kansas Department of Emergency Management.
“Unfortunately in disaster situations, scam artists are often ready to take advantage of the misfortunes of others,” said Michael Karl, FEMA federal coordinating officer for the Greensburg tornado. “People should be especially alert for phone or door-to-door solicitors who hand out flyers and promise to speed up the insurance or building permit process, and those who ask for large cash deposits or advance payments in full.”
“Whether they are architectural, engineering, electrical, or general contractors, most service providers in the building industry are honest,” Karl said, “but disasters attract scam artists. Some claim to be ‘FEMA certified,’ when in fact, FEMA neither certifies nor endorses any contractor.”
Tips for hiring contractors include:
- Get a written estimate. Compare services and prices before making a final decision. Also, read the fine print. Some contractors charge a fee for a written estimate, which is often applied to the cost of subsequent repairs they make.
- Check references. Contractors should be willing to provide names of previous customers. Call several former customers who had similar work done to make sure they were satisfied with the job.
- Ask for proof of insurance. Make sure the contractor carries general liability insurance and workers’ compensation. If the contractor is not insured, the homeowner may be liable for accidents that occur on the property.
- Use reliable, licensed contractors. Call your local Better Business Bureau to inquire about a business before signing a contract. Insist on a written contract. A complete contract should clearly state all tasks to be performed, all associated costs and the payment schedule. Never sign a blank contract or one with blank spaces. Make sure the contract clearly states who will apply for the necessary permits or licenses. Have a lawyer review the contract if substantial costs are involved, and keep a copy for your records.
- Get guarantees in writing. Any guarantees made by the contractor should be written into the contract. The guarantee should clearly state what is guaranteed, who is responsible for the guarantee and how long the guarantee is valid.
- Obtain a local building permit, if required. Permits may be required for site work, other than demolition, and for reconstruction. Contact your local government for permit information.
- Make final payments when the work is completed. Do not sign completion papers or make the final payment until the work is completed to your satisfaction. A reputable contractor will not threaten you or pressure you to sign if the job is not finished properly.
- Pay by check. Avoid on-the-spot cash payments. The safest route is to write a check to the contracting company. A reasonable down payment is 30 percent of the total cost of the project, to be paid upon initial delivery of materials. Federal law gives consumers a three-day “cooling off” period for unsolicited door-to-door sales of more than $25.
- If necessary, cancel a contract in the proper manner. This should be done within three business days of signing. Be sure to follow the procedures for cancellation that are set out in the contract. Send the notification by registered mail with a return receipt to be signed by the contractor.
- Report problems with a contractor or fraud to the Kansas Attorney General’s Consumer Protection Division at 800-432-2310. Kansans may also visit the Web site www.ksag.org for addition consumer tips and information about fraud.
Consumers should also be aware that some rip-off artists may pretend to be employed by FEMA or other agencies. Some traits of scams or con artists can include:
- Lack of proper identification – A FEMA or Small Business Administration (SBA) shirt or jacket is not absolute proof of someone’s affiliation with an agency. Ask to see the laminated photo identification card; if they don’t have it, they are probably not for real.
- Going door-to-door – Persons going door-to-door to damaged homes, or phoning victims and claiming to be building contractors, could be frauds. If callers solicit personal information such as Social Security or bank account numbers, they are not for real. FEMA inspectors may come to your neighborhood but all FEMA inspectors will have proper, laminated, photo identification. Remember, FEMA and SBA inspectors never charge applicants for disaster assistance or for inspections. If in doubt, do not give out information.
- Charging fees to be put on a list or fees to have forms filled out – Some scammers have asked for upfront money to be put on a list or demanded fees to fill out the disaster loan application.
- Offers to increase the amount of your disaster damage assessment – This is not wise and is a sure sign of a scam.
- Asking for cash upfront – Under no circumstances are FEMA and other agency representatives allowed to accept money. FEMA inspectors assess damage but do not hire or endorse specific contractors.
Disaster victims should be leery of anyone they do not know offering to help by filling out disaster assistance documents. Residents should not give personal or financial information to a “good Samaritan” wanting to help. For example, a disaster victim may allow a neighbor to fill out forms for disaster assistance. By doing so, the neighbor could easily give his or her own checking account number and routing information to wrongly receive disaster assistance.
FEMA encourages anyone who believes she or he may have witnessed fraudulent activity to report it immediately through the Department of Homeland Security Office of Inspector General’s Hurricane Fraud Hotline 1-866-720-5721. Residents who feel that they have been a victim of fraud may also contact the Kansas Attorney General’s Office of Consumer Protection at 785-296-3751 or 1-800-432-2310. Kansans may also visit the Web site www.ksag.org for addition consumer tips and information about fraud.
FEMA coordinates the federal government’s role in preparing for, preventing, mitigating the effects of, responding to, and recovering from all domestic disasters, whether natural or man-made, including acts of terror.
Last Modified: Wednesday, 23-May-2007 14:58:28