Be Careful When Hiring Contractors for Disaster Repairs
Release Date: February 28, 2008
Release Number: 1746-004
» More Information on Kentucky Severe Storms, Tornadoes, Straight-line Winds, and Flooding
LEXINGTON, Ky. -- 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 Kentucky Division of Emergency Management to residents affected by the tornadoes and other severe weather Feb. 5-6 in the commonwealth of Kentucky.
"Unfortunately in disaster situations, scam artists are often ready to take advantage of the misfortunes of others," Charlie Winter, in charge of state operations for disaster recovery, said. "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 depositsor advance payments in full."
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:
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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 official.
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Going door-to-door - Persons going door-to-door to damaged homes or phoning victims claiming to be building contractors could be frauds. If callers solicit personal information such as Social Security or bank account numbers, they are not official. 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.
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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.
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Offers to increase the amount of your disaster damage assessment - This is not wise and is a sure sign of a scam.
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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.
"Whether they are architectural, engineering, electrical, or general contractors, most service providers in the building industry are honest," said Michael Bolch, FEMA's coordinating officer. "Sadly, 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:
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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.
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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.
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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.
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Use reliable, licensed contractors. Call your local Better Business Bureau to inquire about a business before signing a contract.
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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.
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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.
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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.
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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.
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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.
Ifyou suspect a repair rip-off, call the consumer protection division of the KentuckyAttorney General's office at (502) 696-5300 or (888) 432-9257 and choose option 3. If you suspect fraud, waste or abuse involving FEMA disaster assistance programs, report it to FEMA's Inspector General's Office at (800) 323-8603.
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: Thursday, 28-Feb-2008 15:30:31