Protect Yourself from Contractor Fraud
As a Hurricane Katrina victim, you have suffered enough. Don't become a contractor fraud victim too. The vast majority of contractors are honest, but there are some who prey upon victims. Here are some guidelines to keep in mind as you rebuild and repair.

Finding a Builder/Contractor

• Pick a contractor you know. If they can't help you, ask them for recommendations. If you must hire a contractor you don't know, talk to several.
• Ask for references . Contact some of the references and ask if they would re-hire the contractor.
• Check the contractor's reputation . Ask the Better Business Bureau, homebuilders' association or board of contractors.
• Make sure the contractor has the licenses required by the City or County.
• Ask for proof of insurance . Be sure the contractor has general liability and workers' compensation insurance. If not, you may be liable for accidents on your property.

Hiring a Contractor

• Insist on a written estimate . Ask up front if there is a cost for the estimate. Make sure the estimate includes everything you expect the contractor to do.
• Ask for a contract . The contract should clearly state all work, costs and the payment schedule. Never sign a blank contract, or one with blank spaces. It may be worthwhile to have a lawyer look at the contract before signing it.
• If the contractor provides guarantees, he/she should clearly state, in writing, what is covered, who is responsible for fulfilling the guarantee (dealer, contractor or manufacturer), and how long the guarantee is valid.
• Canceling a contract . You may be able to cancel a contract within three business days of signing. Be sure to follow the procedures for cancellation that are set out in the contract. Send the notification by registered mail with a return receipt.

During Construction

• Be sure the contactor obtains a building permit and calls for the proper construction progress inspections required by the City or County Code Enforcement officials.
• Be sure the City or County has a copy of the homeowner's Warranty Deed, Survey, Construction Agreement and repair specifications.
• Do not advance any funds to contractor until City or County inspectors have approved building code compliance, quality of work and specified materials and equipment.
• Pay by check. Avoid on-the-spot cash payments. The safest route is to write a check to the contracting company. A reasonable down payment should not exceed 25 percent of the total cost of the project, to be paid upon initial delivery of materials.
• The homeowner should consider having an attorney perform Title updates as they advance funds for construction progress. This is to ensure that the contractor is paying his sub-contractors, material and supply vendors.
• Make sure the work is done to your satisfaction before signing completion papers or making a final payment. A reputable contractor will not threaten you or pressure to sign if the job is not finished properly.

Watch out for these warning signs
Sales Tactics

• The contractor solicits business door-to-door. High-pressure sales tactics and intimidation may accompany this sales approach.
• Beware "FEMA Certified" . This can signal a scam. FEMA does NOT certify or endorse any contractor.
• You're told you've been "chosen" as a demonstration project at a special, low price or you're told a "special" low price is good only today.

Background and References

• You can't verify the contractor's name, address, telephone number, or credentials.
• The contractor won't give you reference - or the references can't be located.
• The contractor seems offended that you are asking for references and background information.

Contracts and Payment

• You're told that on this job, a contract "won't be necessary."
• You are asked to pay for the entire job in advance.
• The contractor will accept payment only in cash.
• You're asked to pay cash to a salesperson instead of a check or money order to a company.

Report problems with a contractor or fraud to Office of the Attorney General.