One in 10 owners has been scammed by a contractor, a new study shows. Here’s why you should consider leveraging your list of reputable service providers for your clients.

As home improvement demand remains strong for kitchen and bath remodels, as well as for outdoor renovations, reports of contractor scams are rising. These schemes are potentially costing homeowners thousands of dollars in losses.  

About one in 10 Americans have been a victim of a contractor scam, losing an average of $2,426, according to a new study of about 1,000 Americans from JW Surety Bonds. The study uncovered the following most common contractor scams:

Chart of contractor scams

Baby boomers were the most likely to fall victim to contractor scams (15%), followed by millennials (13%), the survey shows.

Red Flags to Watch

The study identified the following five items that alerted consumers to a possible scam:

  1. The contractor failed to complete the job or did poor-quality work and did not meet the agreed-upon standards (63%).
  2. The contractor frequently arrived late or missed appointments without a valid reason (40%).
  3. They added extra charges or fees that had not previously been discussed (26%).
  4. They refused to answer questions or were evasive about progress updates (25%).
  5. They provided no written contract or a vague contract without job specifics or costs (13%).

Maddie Weirman, a spokesperson for JW Surety Bonds, a nationwide provider, offers some of the following tips to avoid contractor scams:

  • Ensure the contractor is licensed and insured. “Don’t be afraid to ask the contractor for proof of insurance,” Weirman says. By hiring contractors who are licensed and bonded, homeowners can have extra security; surety bonds provide financial security against contractor scams.
  • Get everything in writing, and review the contract carefully. “Make sure that this contract includes the contractor’s name and information and when the project is projected to start and end,” Weirman says.
  • Never pay the full amount up front. While a deposit is common, Weirman says homeowners should not pay the full, agreed-upon amount until the project is complete to their satisfaction.