In January 2020, The Federal Trade Commission (FTC) released its 2019 Consumer Sentinel Network Report showing that they received a total of 23,963 reports from home repair, improvement, and product fraud. This is a staggering amount of fraud reported by the FTC, and one can expect that when its 2020 report is released the numbers will most likely stay constant or increase. Another concern is that, although home improvement scams can victimize anyone, the elderly are unfortunately a prime target for this type of scam. In 2015, The United States Senate Special Committee on Aging named it as one of the top 10 scams targeting seniors. It is important that as consumers we try to do what we can to decrease the chances of being victimized by unscrupulous contractors. One particular group of unscrupulous contractors this post will focus on are roofing contractors.
It would make sense that fraudsters would target and focus on roofs, as roofs are one of the most expensive components of a home. When hiring a roofer, you should watch for any warning signs that your roofer could be trying to take advantage and scam you. Here are some warning signs you are being targeted in a roofing scam:
- Storm Chasers. Storms draw dishonest contractors like moths to a flame. These contractors are called “storm chasers” and they travel to areas that have recently experienced bad weather. They will knock on your door and pass out flyers offering to repair or replace your roof. They may mention they were just repairing a roof in your neighborhood and can give you a discount. They may try to convince you that they can replace your roof, even if you don’t need it, by filing an insurance claim. Be careful because work done by these contractors is usually substandard and the lifespan of the replaced roof may be half or less of a well-constructed roof.
- Low Starting Bid, Sudden Costs Later. Have ever heard the expression “if it sounds too good to be true, it probably is?” Beware of quotes from a roofer which are substantially lower than other contractors. Eventually these contractors will start finding unforeseen problems that greatly increase the cost due to more materials being needed, more time to repair, etc. Moreover they could also try to increase the costs of the project due to materials going up in price. Suddenly your great deal has become a debacle threatening to cost you much more than any other contractor quoted you. It should be noted that unforeseen problems can legitimately happen, and costs of materials can fluctuate, but the contractor should not try to raise material costs in the middle of your project.
- Insurance Fraud. Think twice before contracting with a roofer who promises you that your insurance claim will be honored by the insurance company prior to filing the claim. This crooked contractor may attempt to commit insurance fraud in order to pocket cash at your insurance company’s expense. One potential way a contractor may commit insurance fraud is through creating two different invoices for the repairs for your home. A lower cost invoice for the consumer, and a higher cost invoice for the insurance company. Sometimes the contractor will even promise you that by overbilling the insurance company, he will reimburse your deductible. This is insurance fraud and it could cost you significantly. Your claim could be denied based on fraud and misrepresentation. Moreover, your claim could result in prosecution. Insurance fraud leads to increased premium rates for all consumers.
- Exaggerated, Created or Mysterious Damage. Another common tactic for shady contractors is to exaggerate or create damage on your roof. After being visited by a storm chaser, he may go onto your roof to “inspect” the damages. He may purposely enhance or create damages to your roof.
- High-Pressure Tactics. Beware of the contractor who offers you a special “deal” that is only available for the next hour or day. This pressure tactic can be a temptation for you to sign a legally binding contract without doing the necessary research to make an informed decision.
- Cheap/Substandard Materials. Fraudsters seek to maximize their profits by using poor materials to make repairs. Many times the repairs they make are only cosmetic and do not really fix the underlying issues present in your roof. They are just covering up the problem which will cost you more money in the long run.
- Large Down Payment/Full Upfront Payment. Beware if the contractor asks for a large down payment or full payment upfront prior to completing, or in many cases even starting, to work on your roof. Dishonest contractors may take your money and leave you holding the proverbial bag. They may disappear without making any repairs, or with the job half completed.
There are several ways homeowners can protect themselves:
- Call your insurance agent first if you believe you need repairs or a new roof because of storm damage.
- Be wary of a contractor knocking on your door offering to inspect your roof without having called them previously.
- If a contractor offers to pay your insurance deductible, do not hire them. This may be a red flag that they are planning to commit insurance fraud.
- Do research! Speak to more than one contractor and get multiple estimates.
- Only work with licensed and bonded contractors.
- Demand references from your contractor and check those references.
- Check your contractor in the Better Business Bureau for complaints.
- Get any contract terms in detail and in writing.
- Never sign contracts with blanks in them.
- Never pay a contractor in full before work is completed.
- Never sign a completion certificate until the work is finished and work is confirmed to be up to code.
- Don’t be afraid to say no. If your instincts tell you something doesn’t feel right, listen to them. Again, if it sounds too good to be true, it probably is.
If consumers do their research they can ensure they are not victimized, and that costs to fix their homes and their insurance rates will not go through the roof.
If you suspect your contractor is involved in some type of insurance fraud, please contact The National Insurance Crime Bureau at 800.Tel.NICB (800.835.6422).
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