How do I spot a contractor scam?

Contractor fraud costs US homeowners billions per year. Post-disaster storm-chasers and deposit-taker scams are the two most common patterns. Spotting scams before signing is far easier than recovering after.

Classic red flags:

1. Unsolicited door-to-door — especially after hail, fire, or hurricane. Most states require disaster-area contractors to be registered; many impose cooling-off periods. Legitimate local contractors don't need to go door to door.

1. Large upfront deposit — California law (Bus & Prof Code §7159) limits residential contract deposits to 10% of contract value or $1,000, whichever is less. Demands for 30-50% upfront are illegal in CA and a red flag everywhere.

1. No license number or evasion about it — if they won't give you a license number in writing, or they give one that doesn't verify on the state board's site, walk away.

1. No written contract — every state with a contractor licensing law requires written contracts for residential work over a threshold ($500 in most states).

1. Cash-only payment — legitimate contractors accept check, credit card, or wire. Cash-only is typically tax evasion plus makes fraud recovery harder.

1. Pressure to skip permit — "you don't need a permit, it's just a small job" when the job clearly requires one. They want to avoid inspection.

1. Pressure to decide fast — "I can give you this price only if you sign today." Legitimate bids are good for 15-30 days minimum.

1. No references or recent addresses — legitimate contractors have recent customers who'll speak with you.

1. Vehicle without company markings — legitimate contractors have marked trucks with license number.

1. Upgrade pressure after start — classic bait-and-switch: low initial bid, then discover "unexpected" problems requiring expensive upgrades after demo.

Specific storm-chaser signals:

• Company name sounds generic.
• Out-of-state address or no physical address.
• Claims to have excess materials "from a nearby job."
• Offers to "take care of your insurance claim" (may be insurance fraud — unlicensed adjusting).

Verification steps before signing any contract:

1. Verify license on state board website.
2. Verify bond and insurance are current.
3. Check complaint history on state board.
4. Verify physical business address.
5. Check 3+ references with recent projects.
6. Check Better Business Bureau and online reviews.

AskBaily verifies license, bond, insurance, and active status of every contractor in our pool daily. We never route homeowners to contractors who fail verification. See also /ask/how-do-i-avoid-contractor-fraud for the companion framework.