Robert Siciliano Identity Theft Expert

It’s a scenario played out every day. Harry Homeowner needs a new roof, home security system, or kitchen installed. He does his due diligence searching out reputable contractors who offer fair pricing. He may look in the classified section of the local paper, do a search online, look on Craigslist or make some calls to friends and family who recently had a new roof installed.

And in every single scenario Harry can get burnt. Each resource provides their own set of pros and cons, and every resource is used by scammers.

The biggest issue consumers face is the fact they don’t do their homework. People fall into 2 categories, 1: they are naïve and have no clue that someone may be looking to scam them or 2: they think they are so smart that nobody can scam them. But if you are smart enough to know that this can happen to you, and do your best to prevent it, you reduce the risks associated with contractor fraud.

Before embarking on hiring any contractor, do your homework. Read up on what the processes are to do the job at hand. While a new roof or home alarm may not be something you want to learn how to do, there are plenty of “do it yourself” or DIY websites that can teach you. Spending 2 minutes searching and 20 minutes reading can save you money and make you sound intelligent to the contractor when asking the right questions.

The best resource is always doing business with someone you know like and trust. Well known brands often vet out contractors and have zero tolerance policies for shoddy work. But you may not know a roofer or alarm installer. So, find a friend or other trusted source who does know a contractor and higher them. But that doesn’t mean you automatically trust. The Better Business Bureau is a great resource for consumers looking to deal with reputable companies. This is your best resource.

Rule of thumb is to always get 3 contractors to bid the job. Be cognizant of how they handle themselves, their level of understanding of the work at hand, and whether or not they voluntarily offer up references. Don’t just automatically trust the guy with the whitest teeth and lowest price. Pay attention to your gut.

Always check references thoroughly. If it makes sense for the job at hand, drive by the house that was referenced and actually look to see the quality of the work that was done. Often construction jobs costs thousands and taking the time to check work is worth your time.

Get everything in legible writing that is laid out in a contract that clearly spells it all out.

Many contractors will request money up front to do the job. Often they need that money as a “commitment” to do the job and motivate them to fill their trucks up with the tools and stock to do the job. This is where I get nervous. I recommend requesting you go with them to whatever supplier they get their stock from and paying for it directly. If they charge a markup on the stock (it’s usually 15%) tell them you’ll gladly give that to them.

It’s best to break the payment down in 3 parts. You’ve already paid for the stock so now all you have to do is pay for labor. One third upon showing up to do the work, one third halfway through the job and one third when they are done.

Robert Siciliano personal security expert to Home Security Source discussing scam prevention on The Big Idea with Donny Deutsch on CNBC