State, local, and federal officials in Texas are warning homeowners to be on the alert for scammers and price gougers who are claiming to be contractors.
As you know, Texas just had a “deep freeze” during a series of winter storms that caused waterlines to freeze and break and resulted in rolling blackouts with millions of Texans being left without power for days at a time. This also resulted in thousands of homes being damaged – houses in Texas are just not built to withstand freezes!
As with any natural disaster that causes widespread destruction, numerous scammers show up to prey on homeowners. The same thing happens when we have a hurricane. Numerous out-of-state contractors show up to take advantage of the abundance of work that needs to be done. A small local insurance company told me they already had 17,000 claims!
Many are desperate to get their homes repaired, and there is a shortage of local plumbers and other contractors due to the sheer amount of damage that Texas suffered. How do you find a reputable contractor who can help with your repairs and avoid getting scammed by contractor fraud?
How to Avoid Getting Scammed: Recognize Contractor Fraud When You See It
Plumbers and other contractors have arrived in Texas from across the country to help fix broken pipes and other damage caused by the winter storms, and the state is issuing provisional licenses to out of state plumbers.
Don’t get me wrong – the out of state contractors are absolutely welcome and Texas needs their help getting back on its feet. But Texans also need to know how to avoid getting scammed by unethical contractors and by non-contractors who are out to make a buck at your expense.
There are many different variations of contractor fraud and scams to take advantage of hard-hit homeowners, but let’s take a look at some of the more common themes.
Price Gouging
Even if the contractor is “legit” and licensed by the state of Texas, you must look out for price gouging – an inevitable consequence of any natural disaster. If a contractor strolls in and says, off-the-cuff, it’ll cost you $15,000, that could be a red flag if they have not examined the damage and provided you with a detailed estimate that itemizes the materials and labor required.
How do you avoid price gouging?
Get multiple estimates. Even if you are comfortable with the first contractor, get at least two more bids from other licensed contractors to compare both the costs and the process that they use to arrive at that cost.
Low-Balling the Price
Another common scam is to provide a low-ball bid to complete a job. Contactor A might give you what seems like an extremely low estimate, beating the prices of Contractors B and C. That sounds great, and you hire Contractor A, but when the job is done you are hit with an invoice that is double or triple the estimate that was provided.
Why pay if they are charging more than the estimated cost? If you don’t, they will put a mechanic’s lien on your property…
Or, Contractor A might insist on payment up front. Not wanting to miss the better deal, you pay them. But, once the cash is in their pocket, you never see them again…
Phishing Scams
Phishing scams involve a scammer sending you text or email messages that trick you into giving them your personal information like account numbers, passwords, date of birth, or social security number.
They sometimes work because the messages appear to be from a company you know and trust – like your bank, credit card company, online payment apps, utility companies, or contactors. These messages may attempt to trick you into clicking a malicious link or opening an attachment by:
- Saying there have been suspicious login attempts,
- Saying there’s a problem with your account,
- Asking you to confirm personal information,
- Asking you to click on a link to make payment,
- Telling you to click on a link to confirm a refund or payment from the government or your insurance company, or
- Providing a fake invoice as an attachment.
Utility companies have also warned customers of social media scams where the scammers ask for customers’ account number in order to get their power turned back on.
Charity Scams
Charity scams always crop up after a natural disaster – if you are contacted by charitable organizations, take the time to ensure that you are talking with an actual charity and not a scammer who will take your money and run.
Don’t give immediately – do your research first, and never donate cash or wire money to a charitable organization.
Door to Door or Telephone Solicitations
If a contractor contacts you, whether it is a cold call on the phone, an email, text message, or an in-person visit at your home, you should be skeptical.
If you contact a business, whether you call them or walk into their office, you know who you are talking to. When someone shows up at your door, however, they can provide you with fake credentials, a fake company name, or a fake email address. Do your research and confirm that the person you are talking to is who they say they are and that they are licensed by the state of Texas to perform the work they are offering to do.
Insurance, Home Warranties, or Government Grants that Don’t Exist
The Department of Justice (DOJ) is warning about scammers who are contacting homeowners with false claims about insurance coverage, home warranties, or government grant money to cover repairs.
If it sounds too good to be true, it probably is. Make sure that you know who you are talking to, and independently verify any claims made by purported contractors who contact you directly.
What are some steps that you can take to avoid getting scammed in the aftermath of Texas’s winter storms?
How to Avoid Getting Scammed by Contractor Fraud
The first step is to be aware that these scams are happening and to understand how they work. Some other steps that you can take to avoid getting scammed include:
- Take your time and research contractors before choosing a company to do your repairs – get at least three bids for the job and verify that the contractor you choose has a valid physical address.
- Google the contractor and look at Google reviews, Better Business Bureau, Consumer Reports, and other online reviews from former customers.
- Request a copy of the contractor’s current license and permits that they pull before starting the job. Make sure the permits are in the contractor’s name (not yours), because the person that pulls the permit is responsible for the work if it is not up to code. In Texas, electricians, plumbers, and air conditioning contractors all must be licensed by the state.
- If a contractor contacts you directly, walk away and find a contractor on your own – call their number from a directory, get a referral from a friend, and confirm that the contractor is who they say they are before entering an agreement with them.
- Don’t be rushed – if a sales rep wants you to sign a contract, insist on taking a day or longer to review the terms, paying attention to the price, the materials that will be used, and what other companies are charging for similar work.
- Don’t pay for the job up front. Although it may be acceptable to make a partial payment before a contractor begins work (allowing them to purchase materials and cover incidental costs), do not pay them in full until the work has been completed and you have inspected it.
- Carefully research any non-profit organizations before donating, ensure that the person you are talking with is who they say they are and that they are with an actual non-profit, and never donate in cash.
Please feel free to contact one of our Murray Lobb attorneys to obtain our legal advice before signing an agreement with a contractor, to avoid getting scammed by contractor fraud, or what to do if you or your business are a victim of contractor fraud after Texas’s winter storms or any natural disaster in our state.