Avoiding the Scam


USAA members James and Carolyn Butler did lots of things right when they hired a contractor to remodel two bathrooms in their Phoenix home. They chose a licensed professional, visited his company's kitchen-and-bath showroom, checked with the Better Business Bureau (BBB), and got a written contract. Two years later, they're still trying to settle a claim for incomplete work on the $11,000 job. Their biggest mistake? They paid in full before the project was completed.

"We put 10 percent down, and the contract said we were to pay the balance when materials were delivered," says Mr. Butler, adding that at the time the balance was due, workers had gutted one bathroom, left a sewer line open, and damaged the main water valve. "We needed them to finish. So my wife cut the check " and that was the end of the work." Since then, Mr. Butler has tracked down 25 other homeowners duped by the same firm, now out of business. But that doesn't make him feel any better. As an auto injury claims adjuster for USAA, he's trained to detect insurance fraud. "This looked like something I could trust," he says. "I didn't have my guard up."

Beware the con

Joining the crowdThe Butlers aren't alone. Contractor fraud reported to BBB offices increased 31 percent since 2001. Last year brought 9,380 complaints nationwide. Better Business Bureau spokeswoman Sheila Adkins blames the spike, in part, on a rebuilding surge after recent hurricanes. The recent housing boom also encouraged homeowners to capitalize on increasing home equity through renovation projects. Over the past five years, home improvement contracting has ranked among the top three concerns in national consumer complaint surveys. "The industry does have its problems," Ms. Adkins says. "Still, there are thousands of reputable contractors who deliver quality work on time and within budget." Everett J. Collier, a San Francisco certified remodeler and president of the National Association of the Remodeling Industry, acknowledges the bad apples. "They're just crooks, not contractors," he says. "Ninety nine percent are good-hearted Americans who do their jobs well and are just trying to make a living." But awareness of the fraud issue and how to avoid it makes homeowners savvier. Mr. Collier suggests getting referrals from family and friends to find contractors who have stellar histories in the business. "Once you've identified a couple of reputable ones, bring them in, tell them about your project, interview them, and see if you have chemistry," he adds. "The contractor is going to be in your sacred space, and you want to feel comfortable with him or her " and the team of subcontractors that might be hired." Beyond that, the detailed written contract and clear communication make for a good working relationship. "Homeowners need to know what they want," Mr. Collier says. "If you don't fill in the blanks, the contractor will. If you're unclear, the contractor isn't going to be able to read your mind." Preplanning can save you money and prevent changes in the middle of the project, which cause delays and drive up costs. And if you do decide in the midst of the remodel to order a different appliance, for instance, or to take down that wall in the family room after all, get the changes in writing and create a new written work schedule so everyone is on the same page.

Lesson learnedToday, the Butlers would follow such advice. Wiser and on alert, the couple finished that botched bathroom project themselves and now rely on a trusty handyman friends recommended for odd jobs. And Mr. Butler doesn't condemn the entire industry because of one lousy experience. "There's always an element of risk whenever you attempt any contracting project," he says. His advice is simple: "Let the buyer beware."

Problems with your current contractor? Here's what to do:

1. Talk through the issue directly. Jot down what you discuss and any promises made, and set a reasonable time frame for problems to be fixed -- whether it's24 hours or two weeks.

2. Write a follow-up letter. Include the problem, a summary of your conversation, and how you want the issue resolved.

3. File a complaint. Write to your local Better Business Bureau or the Council of Better Business Bureaus at bbb.org. You can also inform the Federal Trade Commission at ftc.gov.

4. Take legal action. Your options:- Contact your state's contractor regulatory agency, if there is one. To find out, check contractor-license.org.-Call the consumer division of your state attorney general's office.-Take the case to a small-claims court.-Contact an attorney for other professional advice.Source: The Council of Better Business Bureaus; Federal Trade Commission

James Butler, a USAA employee and part-time minister, says he's forgiven the contractor who took the money and ran. But he also filed a formal complaint with the Arizona attorney general's office.

For more information about choosing a good contractor, or other home buying advice visit www.usaa.com or www.military.com/finance.


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