Whether you are hiring a contractor to work on your home or your business property, taking the time to conduct some due diligence can help you avoid costly scams. Even when no scam is afoot, a little research helps you ensure you are hiring an experienced contractor who is less likely to leave you with defective construction or repairs.
According to the Federal Trade Commission, there are some common signs that a "contractor" might also be a scam artist. First, the FTC says you might want to avoid contractors that go door to door in a cold-call fashion, attempting to sell you their services. Most licensed contractors don't work this way -- they reach out through normal advertising channels and word of mouth and are typically too busy to go door to door. While some door to door contractors are legitimate, the FTC warns consumers to avoid those that offer kickbacks or discounts for finding other customers.
If a contractor says they have all the materials for your job left over from another job, and they will provide you with a deep discount, it might be a sign of a scam. The same is true for contractors that press you for immediate payments, particularly if they want payments in cash or money order only. You should also avoid contractors who want to hook you up with a lending source so you can borrow cash to make payments to the contractor.
Licensed contractors provide a contract, invoice you as agreed upon and complete work according to the contract. If you are dealing with a contractor and you have any concerns about the legality of his or her operation, then consult a construction law professional for advice on how to proceed with any claims or reports.
Source: Federal Trade Comission, "Hiring a Contractor," accessed June 03, 2016