Contractor scams after a disaster

After a hurricane, flood or fire, the house needs fixing fast and offers pour in. Most come from people who want to help, but some take advantage of fear and haste. This guide is for you if a disaster damaged your home and you want to hire someone without losing your money, or if someone says they’re from FEMA and asks you for something. It explains how to recognize the scams, how to pay carefully, what rights you have to cancel and where to report.

What FEMA charges for an inspection

$0¹

The most FEMA recommends paying up front

Half¹

Written estimates the FTC recommends

3²

To cancel certain sales made at your home

3 business days⁴

How scammers work after a disaster

The Federal Trade Commission (FTC) describes the pattern: someone knocks on your door or calls saying they can fix your leaky roof, put in new windows or install solar panels. They may find you right after a flood, windstorm or other disaster. They pressure you to decide quickly and ask for cash or offer to get you financing. Then they run off with your money, do a poor repair that makes things worse or get you to sign a bad financing agreement that puts your house at risk.²

The FTC also lists the most common tactics: they say they’re “in the area” or have materials left over from another job, push you to decide immediately, ask for everything up front or only cash, ask you to get the permits and suggest you borrow from a lender they know.³

Fake inspectors and fake government help

After a disaster, FEMA may send an inspector to your home if you applied for help. FEMA says its housing inspector never asks for your nine-digit registration number, because they already have it; always wears an official badge you can ask to see; doesn’t ask for bank information; doesn’t climb on roofs or enter crawl spaces; and FEMA never charges for an inspection.¹

You don’t pay for the help either. FEMA says DHS, FEMA, the SBA and other federal agencies never charge for disaster assistance or for help filling out the application, and that you shouldn’t believe anyone who promises a disaster grant in exchange for a large cash deposit or full payment up front.¹ The FEMA disaster assistance guide explains how to apply yourself, for free.

Real FEMA inspector or impostor

Real

FEMA inspector

• Wears an official badge and shows it if you ask.¹
• Already has your registration number.¹
• Doesn't charge, ask for bank details or climb on the roof.¹

Careful

Impostor

• Asks for your registration number or bank account.¹
• Charges for the inspection or for filling out the application.¹
• Promises a grant in exchange for a deposit.¹

If in doubt, give no information or money, and call FEMA.¹

There is identity theft too. FEMA warns that some criminals apply for help with stolen names, addresses and Social Security numbers. If a FEMA inspector shows up and you didn’t apply, tell them you didn’t apply. If you get a FEMA letter without applying, call its Helpline at 800-621-3362, 7 a.m. to 11 p.m. ET, every day.¹ The identity theft guide explains how to protect your credit.

Before you hire and before you pay

FEMA recommends using licensed or verified local contractors with reliable references, not paying more than half the cost of repairs in advance and demanding that they detail the job with guarantees in writing.¹ The FTC adds: ask people you trust for recommendations, check license and insurance, get three written estimates, don’t start until you have reviewed and signed a contract, and don’t pay by cash or wire.²

How to hire after a disaster

1. 1. Photograph the damage

   Before any repair

   And contact your insurance company, as Ready.gov recommends.⁶

2. 2. Ask for recommendations and check the license

   Before calling

   Licensed or verified local contractors with reliable references.¹

3. 3. Get three estimates

   Before deciding

   In writing, for the same work.²

4. 4. Sign a complete contract

   Before work starts

   With the job detailed and the guarantees in writing, no blank spaces.¹

5. 5. Pay carefully

   During the job

   No more than half up front, never cash or wire.¹

Watch out for financing and your deed

One of the worst scams uses your house as collateral. The FTC describes it: a contractor offers to install a new roof or remodel your kitchen and says he can arrange financing through a lender he knows. After work starts, he asks you to sign papers, which may be blank. Later you find out you agreed to a home equity loan with a high interest rate, points and fees, and the work is poor or unfinished.³

The FTC advises never agreeing to contractor financing without comparing other lenders; not signing a document you haven’t read, that’s in a language you don’t understand or that has blank spaces; and never transferring your deed to anyone without consulting an attorney, a knowledgeable family member or someone else you trust. If you talk with the seller in Spanish, depending on where you live and what you’re buying, you may be entitled to a copy of the contract in Spanish.³

Your right to cancel

The FTC’s Cooling-Off RuleFTC Cooling-Off RuleThe Cooling-Off Rule is a federal FTC rule that gives you the right to cancel certain sales a seller makes to you in person away from its place of business, for example in your home, even if you invited the seller. You can cancel before midnight of the third business day after the purchase. The seller must give you a contract in the same language used in the sales pitch, such as Spanish, with two copies of a cancellation notice, and tell you out loud that you can cancel. It does not cover, among others, sales of real estate or insurance, or purchases below a certain price.See the full definitionClose gives you three days to cancel certain sales made at your home, including when you invited the seller. Your right to cancel for a full refund lasts until midnight of the third business day after the sale; Saturday counts as a business day, Sundays and federal holidays don’t. The seller must give you two copies of a cancellation form and a copy of the contract, and if you cancel, has 10 days to refund all your money.⁴

After a disaster, read the exceptions. The Rule doesn’t cover sales under $25 at your home, sales needed to meet an emergency, or repairs you asked the seller to come do; things you buy beyond that repair are covered.⁴ If you signed something you didn’t expect, read the contractor scams guide, which explains the full rule.

Example with real numbers

A seller after the hurricane

An example in words of how the rules apply.

Monday

A seller shows up uninvited and offers a new roof; you sign at home

What the FTC says

You have until midnight Thursday to cancel, if there's no holiday

How to cancel

Sign one copy of the cancellation form and mail it before the deadline

If you cancel

The seller has 10 days to refund your money

If you called them for an emergency repair

The Rule may not cover that sale: read the contract before signing

The dates follow the FTC's example for a Monday sale.⁴ Plan the repair costs in your family budget.

Run it with your numbersFamily budget

Price gouging: what attorneys general say

Many states have laws against price gouging after a disaster. California’s Attorney General explains that Penal Code section 396 prohibits raising the price of many goods and services by more than 10% after an emergency is declared, including building materials and repair and reconstruction services. Protections generally last 30 days after the declaration, but 180 days for reconstruction and emergency cleanup services. You can report on its website or at (800) 952-5225.⁵

In Texas, the Attorney General asks people to be on the lookout for price gouging, flood-damaged vehicles and other post-emergency scams.⁷ The rules change from state to state: look up your state attorney general’s page, and keep the estimates and receipts that show the prices you were charged.

If you were already scammed

The FTC recommends first trying to resolve it with the contractor; following each call with a letter sent by certified mail with a return receipt; and keeping notes and copies. If it isn’t resolved, get help from your state attorney general or local consumer protection office, your local home builders association or a dispute resolution program.³ For FEMA-related fraud, you can email StopFEMAFraud@fema.dhs.gov or contact your state consumer protection office.¹ Free legal aidlegal aidLegal aid is the free civil legal help that nonprofit organizations and their lawyers provide to low-income people in civil, not criminal, matters. In housing, that includes representing families facing eviction or foreclosure, alongside matters such as custody, child support, protection from domestic violence and access to benefits. In the United States, the Legal Services Corporation, created by Congress, funds a nationwide network of these organizations; its finder points you to the one in your area. Each sets its own income limits.See the full definitionClose in your area can help with your case.

If this is you

Someone says they're from FEMA and asks for money

FEMA never charges for inspections or aid; don't pay, and call FEMA.¹¹

A seller pushes you to sign today

Don't sign blank papers or papers in a language you don't understand.³

The sale was in Spanish

Depending on where you live and what you buy, you may be entitled to a copy of the contract in Spanish.³

You're asked to sign your deed over to someone

Never do it without consulting an attorney or someone you trust.³

Costly mistakes

• Mistake: Paying someone who says they're from FEMA.

  Instead: FEMA never charges for inspections or aid.¹¹

• Mistake: Paying for the whole repair up front.

  Instead: Don't pay more than half before the work is done.¹

• Mistake: Paying cash or by wire.

  Instead: Pay in a way that leaves a record, and get a receipt.²

• Mistake: Accepting the loan the contractor brings.

  Instead: Compare other lenders before signing.³

• Mistake: Assuming you can always cancel within three days.

  Instead: The Rule doesn't cover emergencies or repairs you asked for; read the contract.⁴

What to do this week

1. Photograph the damage before any repair and notify your insurer.⁶
2. If someone says they’re from FEMA, ask for the badge and don’t give bank details.¹
3. Get three written estimates from licensed local contractors.²¹
4. Check the guide to what a repair quote must include before you sign.
5. Don’t pay more than half up front, and never cash or wire.¹²
6. If you’re charged gouging prices or scammed, report it to your state attorney general.⁵³