Be Careful When Hiring Contractors for Disaster Repairs
Release Date: August 14, 2007
Release Number: 1712-034
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OKLAHOMA CITY, Okla. -- Watch out for scam artists. That is the warning issued by officials with the Oklahoma Department of Emergency Management (OEM), the Federal Emergency Management Agency (FEMA) and the U.S. Small Business Administration (SBA).
"Unfortunately in disaster situations, scam artists are often ready to take advantage of the misfortunes of others," said Fred W. Liebe, state coordinating officer. "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."
Federal Coordinating Officer Philip E. Parr said, "Whether they are architectural, engineering, electrical, or general contractors, most service providers in the building industry are honest, but all too often disasters attract scam artists. Some claim to be state or FEMA certified, when, in fact, neither the state nor FEMA certifies or endorses any contractor."
If you suspect contractor fraud, contact the Oklahoma Attorney General's Consumer Protection Unit at 1-405-521-2029 or online at www.oag.state.ok.us or contact your local Better Business Bureau.
If you suspect fraud, waste or abuse involving FEMA disaster assistance programs, report it to FEMA's Inspector General 1-800-323-8603. 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 (and other local sources) to inquire about a business before signing a contract.
- Insist on a written contract. A complete contract should state clearly 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 state clearly 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.
Consumers should be wary of contractors who:
- Lack proper identification. A FEMA or SBA shirt or jacket is not 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 legitimate.
- Go 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 legitimate. 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.
- Charge fees to put customers on a list or to fill out forms. FEMA registers all applicants without charge and has experts at Disaster Recovery Centers and through the toll-free registration line 1-800-621-FEMA (3362), or TTY 1-800-462-7585 for the speech- or hearing-impaired to assist with forms and to explain the many available assistance and loan programs.
- Offer to increase the amount of your disaster damage assessment. This is not wise and is a sure sign of a scam.
- Ask 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.
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, 15-Aug-2007 14:32:25