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October 2007

Watch Out for Flood Recovery Scams

August was a trying month for many in the flooded parts of south central and southwest Wisconsin. Now the hard work begins of rebuilding homes and communities. Unfortunately, con artists often move in to take advantage of such situations and seek to make flood victims the victims of financial scams as well.

Con artists know that homeowners are often desperate because the local, reputable contractors have more repair work than they can possibly handle. This leaves open the opportunity for con artists to swoop in from other states to make quick hits and then leave before law enforcement can catch them. The theft is quite simple: They will convince you that they can do the work faster and cheaper than anyone else and then will ask for all of the money up front.

How can you protect yourself? Where possible, get more than one repair estimate and make sure the bids are apples-to-apples comparisons. If you have insurance, your insurance company will likely ask for more than one estimate. You should also ask for references and contact the references to determine if the work was done correctly and on time.

Get a written contract and make sure you read and understand all parts of that agreement. Wisconsin law requires a written contract if payment is required before the work is completed. Understand that oral promises made before the contract is signed are not part of the contract unless they are written into the agreement.

Your contract should include a full job description, a detailed materials list, the total price, a starting and completion date, and a statement of any warranties on materials, labor, or service.

You should also ask the contractor for a certificate of insurance with your name and address listed as a certificate holder. This ensures you are notified if the contractor cancels the insurance policy. Make sure you ask for lien waivers from the contractor before you make payment and leave a substantial payment for the end to ensure the contractor has the incentive to complete the repair project correctly. Wisconsin law requires the contractor to provide you with a lien waiver. If you don’t get the waiver, subcontractors could then file lien claims, which could make you pay twice for the same work.

Wisconsin law also requires contactors to advise you of all required building or construction permits and they should be registered with the Wisconsin Division of Safety and Buildings to show proof that they have paid for workers’ compensation and unemployment insurance and have proven financial responsibility. Contact the division at 608-266-3151 to determine if the contractor has registered. If not, you will know that the contactor is someone to be avoided.

Finally, Wisconsin law provides you with a three-business-day right to cancel if you signed the contract at your home. Make sure to mail a written cancellation notice to the contractor no later than midnight on the third business day.

Wisconsin Bureau of Consumer Protection spokesperson Glen Loyd told me that there were no reports of con artists victimizing Wisconsin flood victims as of the first week of September, but stay vigilant. Make sure you contact the bureau at 1-800-422-7128 to find out if complaints have been filed against a particular contractor. You may also want to contact the Better Business Bureau at 1-800-273-1002.

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