Disaster Officials Issue Fraud Warning

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Release date: 
November 19, 2002
Release Number: 
1442-02

Birmingham, AL - State and federal officials are advising residents of Alabama's tornado disaster counties to use caution when hiring contractors to clean up and repair their homes and businesses. Experience has taught emergency management officials that residents often get into disputes with repair services over the quality or cost of the work they have done. With that knowledge, the following suggestions are offered to families rebuilding after the recent severe storms. Caution is the safest course for these people, who have already suffered serious storm losses, officials advise.

  • Use reliable, licensed contractors. Demand to see a license. Check with the Better Business Bureau or the state board of contractors to make sure the firm has no outstanding consumer complaints filed against it.

  • Get a Written Estimate. Be sure to obtain a written estimate and read the fine print. Get estimates from several reputable contractors before making a final decision. Hire local contractors if possible.

  • Check References. Call former customers who had similar work done to make sure they were satisfied with the job.

  • Proof of Insurance. Make sure the contractor carries general liability insurance, workers' compensation and is bonded. If the contractor is not insured or bonded, the homeowner can be liable for accidents that occur on the property.

  • Ask for a Written Contract. A complete contract should clearly state all the work to be performed; all associated costs and the payment schedule and obligate the contractor to pay for all materials ordered. Never sign a blank contract.

  • Licenses. Make sure the contract clearly states who will obtain the necessary permits or licenses. Have a lawyer review the contract if substantial costs are involved. Keep a copy of the signed contract.

  • Written Guarantees. If the contractor provides guarantees they should be written into the contract clearly stating what is guaranteed, who is responsible for the guarantee, and how long the guarantee is valid.

  • Pay by Check. Avoid advance payments and cash payments if possible. A reasonable down payment is 30 percent of the total cost of the project. Federal law requires a three-day "cooling off" period for unsolicited door-to-door sales of more than $25.

  • Canceling a Contract. Canceling a contract should be done within three business days of signing. Send notification by registered mail.

  • Make final payments only after 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.
Last Updated: 
July 16, 2012 - 18:46
State/Tribal Government or Region: 
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