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Contractor fraud is a growing issue across the country as fraudulent contractors find new and expansive methods of tricking homeowners into paying for work that is either done poorly or not completed at all.
Despite ongoing efforts to inform homeowners about the dangers of contractor fraud from national organizations and insurance carriers alike, cases have only continued to rise over the last few years. In 2022 alone, Americans lost $82 million to these scams.
Despite the widespread impact of contractor fraud, certain areas experience it more often. States like North Carolina, for example, which are prone to natural disasters like hurricanes, are frequently targeted by these scammers.
In this article, we dive into how homeowners in North Carolina and across the country can prevent contractor fraud.
Learn More: Contractor Fraud: What It Is & How to Avoid It
North Carolina Contractor License Check
One of the most effective ways to confirm whether or not a contractor is reputable is by asking for a copy of their contractor license. Companies in good standing are properly accredited by the North Carolina Licensing Board for General Contractors and can show you proof of that qualification. Those who cannot show you this proof are likely not reputable and should be avoided.
In North Carolina specifically, you can check a contractor’s license using this resource from the North Carolina Licensing Board. You can also contact your insurance carrier and ask them to verify that the contractor at hand is in good standing.
3 Other Warning Signs of Contractor Fraud
Alongside checking for a contractor license, there are several other key ways to indicate if you’re being scammed. Below, we outline the top three most common and provide insight into how to avoid them.
#1: You’re approached by an unrequested contractor
One of the most common tactics of fraudulent contractors is to go house to house after a natural disaster and try to elicit work. For instance, they may claim they’ve been working on a neighbor’s roof and noticed you have damage on yours they’d be happy to take a look at for you.
However, in most cases, this is not the truth. Instead, fraudulent contractors participate in what is known as “storm chasing” and travel the country looking for people whose homes are in a vulnerable state after a storm or who may believe their home has suffered damage because of recent weather—even when it hasn’t.
Be on guard for this kind of baiting from scammers and avoid engaging with contractors you didn’t personally request.
#2: The contractor uses urgency or high-pressure tactics
Fraudulent contractors might offer you a special deal if you pay upfront or ask you to sign a contract on the spot—a pressure tactic to get you to make a rash decision you will likely regret.
Don’t let a contractor guilt or scare you into making a decision you’re uncomfortable with; you have the right to request the time and materials you need to feel confident in your arrangement, and any contractor who denies you that right is likely not reputable.
#3: They ask for payment upfront
Many scammers request a sizeable down payment for work and never return to fulfill their obligation. If a contractor asks for money before completing the job, this should be a red flag. Always feel comfortable contacting your insurance carrier to check that a company is in good standing before providing payment.
A Real World Example: A fraudulent contractor recently requested $97,000 from a Central insured to remove a tree that blew down onto their garage during a storm. Central’s Anti-Fraud team was informed of this high claim, and investigated its legitimacy. Eventually they determined that this was, in fact, a price-gouging scam, and was able to prevent the policyholder and the carrier from losing a significant amount of money.
The Central Difference
At Central Insurance, policyholders in North Carolina and beyond can rest easy knowing they are covered in case of contractor fraud. Our industry-leading team of fraud detection agents is equipped with the technology and partnerships to identify, mitigate, and prevent fraud cases and help keep homeowners safe.
Learn more about our Special Investigations Unit and the advanced analytics systems they’re using to prevent fraud across the country, then get in touch with your insurance agent today to learn if you might be a good fit for Central.
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