Unlicensed or Fraudulent Contractors
As a result of increased demand for constructions services, many unlicensed contractors seek out work. Please check with the Contractor’s State Licensing Board website to make sure that the contractor you hire is licensed, insured and bonded at http://www.cslb.ca.gov/ and that they have the appropriate specialty license if required. Contracting without a license is a crime and enhanced penalties are provided for contracting without a license during a state of emergency. Reports of unlicensed contractors can also be made on the website.
Additionally, some contractors may take on more work that they are able to perform or try to exact a greater deposit than the $1,000 deposit they are authorized by law to require before work commences. Reports of any problems with licensed contractors should also be reported to the State Contractors Board.
Therefore, before signing a contract with a contractor for any wildfire-related repairs or rebuilding, consumers are encouraged to follow these guidelines:
- Do not do anything based only on a handshake. For both home improvement projects and new construction of single family homes, there must be a contract in writing signed by both parties and the consumer must be furnished a copy of the written agreement (signed by the contractor) before work starts. Additionally, all changes to the original contract must be made in writing and signed by both parties. After a disaster, consumers have seven business days to cancel a contract, as long as it was not signed in the contractor’s place of business.
- Be cautious when making a down payment because it is common for fraudsters who receive a big down payment to then disappear without completing any of the contracted work. For a home improvement job in California the down payment can total no more than 10% of the contract price or $1,000, whichever is less.
- It is illegal for an unlicensed person to advertise that they can do construction work unless the person clearly states that they are “not a licensed contractor.” The person must be licensed by the Contractors State License Board (CSLB) to contract for work that costs $500 or more (labor and materials).
- The contractors license number and business name must be displayed on all commercially registered vehicles used in the course of business. Additionally, the contractors license number must be listed on any contract, bid, or advertisement for construction work.
- Fraudsters may steal a business name and/or license number and represent it as their own or say that they work for a licensed contractor even though they are actually not affiliated with that contractor. For a home improvement project, only someone with a contractors license, or an employee of a licensed contractor who is a registered Home Improvement Salesperson on file with the CSLB, is allowed to give a bid and/or sign a contract.
- Consumers can use the “Instant License Check” feature on the CSLB website to look up a contractor or Home Improvement Salesperson by name, license number, or doing business as (DBA), to verify that they are in fact a licensed contractor or registered Home Improvement Salesperson. Consumers can also get a wealth of information on rebuilding after a disaster by visiting the “Disaster Help Center” on the CSLB website.
It is a felony to contract without a license in a declared disaster area. Additionally, any person involved in a scheme to defraud a consumer of a residential or nonresidential structure in connection with the offer or performance of repairs to the structure for damage caused by a natural disaster could be ordered to make full restitution to the victim and/or pay a fine of up to $25,000 and could also be imprisoned.
If you believe you have been the victim of disaster-related contractor or construction fraud, please contact the FBI San Francisco Division at 415-553-7400 or https://tips.fbi.gov or the Contractors State License Board at 800-321-2752 or www.cslb.ca.gov.
FBI San Francisco Division
website - Tips
Contractors State License Board
Better Business Bureau (BBB) Tips
As evacuees return to their homes and begin to assess the fire damage, one of the biggest questions on their minds might be how to rebuild. Although there is usually an outpouring of support and generosity from the public after a tragedy, unethical businesses may also emerge to try to take advantage of those recovering.
It’s important for those affected by the fires to do their research when hiring a business. In 2016, consumers nationwide filed more than 6,000 combined complaints against both remodel as well as repair contractors and general contractors with BBB. Complaints frequently involved workers doing a shoddy job and consumers having trouble getting their problems resolved.
The following BBB tips will help fire victims rebuild and recover:
- Watch out for storm chasers and home improvement scams. According to the BBB Risk Index, home improvement scams are the most risky scam to consumers. In 2016, 53% of scam victims reported losing money, and the median loss was $1,425. Unfortunately, consumers in fire-stricken zones may see a surge in “storm chasers” looking to make money off of their misfortune. Consider it a red flag if: a worker shows up on your doorstep unannounced without identification; someone offers a “too good to be true” deal or uses high-pressure sales tactics; a worker claims they just finished a job down the street and have left-over materials; the contractor doesn’t have a permanent place of business; the worker claims to be FEMA-certified; or if anyone asks for personal information like bank account or Social Security numbers. Visit bbb.org/homescam to learn more.
- Check with your insurance. As soon as you can, call your insurance provider and ask about policy coverage and specific filing requirements. Take pictures of the damage, and make sure to save all receipts, including those for food, temporary lodging, or other expenses that may be covered under your policy.
- Take your time. Although you may be anxious to get things back to normal, avoid letting your emotions get the better of you. Don't be pressured into making an immediate decision with a long-term impact. Be proactive in selecting a business and not reactive to sales solicitations. Make temporary repairs if necessary. Don't rush into decisions and don't automatically hire the first contractor who comes along.
- How to find a business. Visit bbb.org to find a trustworthy contractor near you. A contractor’s BBB Business Profile includes company information, a BBB rating, a complaint history, and reviews from past customers. Look for a contractor that specializes in the work you need to be done – whether it be smoke damage, rebuilding, or debris removal. Take time to shop around and get three estimates based on the same specifications and materials. It’s also important to ask for, and check, references.
- Make sure they’re licensed. According to the Contractors State License Board (CSLB), “it is a felony to contract without a license in a declared disaster area”. You can easily verify licenses at www.cslb.ca.gov. To become licensed, “a contractor must pass two licensing exams, verify at least four years of journey-level experience, carry a license bond, and pass a criminal background check” (CSLB). CSLB licenses contractors in 43 different classifications, so verify that the contractor holds a license for the work you are having done. Ask for proof of insurance as well.
- Get it in writing. Make sure you get a written contract from anyone you hire. It should specify the work to be done, the materials to be used, and the price breakdown for both labor and materials. The more details, the better! Any promises made orally should be written into the contract, including warranties on materials or labor. Be sure their name, address, license number and phone number along with a start and end date for the work are included in the contract. Read and understand the contract in its entirety and don’t sign a blank contract. A copy of the signed contract should be given to you when you sign. Monitor the progress of the project and keep a paper trail of all documents.
- Don’t pay in full before work starts. Never pay full price in advance and don’t be pressured to pay cash. Establish a payment schedule. Do not make a final payment until you are satisfied with the completed work. CSLB advises that you pay no more than ten percent down or $1,000 – whichever is less. Don’t let the payments get ahead of the work.
- What to do if you have a problem. If you’re having issues with your contractor and, despite your efforts, they can’t be fixed, you have resources. File a complaint with your BBB at bbb.org/complain. It’s also wise to file a complaint with CSLB. To report home improvement scams, or any other type of scam, visit BBB Scam Tracker at bbb.org/scamtracker.
Please visit go.bbb.org/sf-norcalwildfires for more Northern California wildfire resources, including tips for donating, rebuilding, and avoiding scams.