From Sleazy Contractors To BedBugs - Homeowner Scams On The Rise

Homeowners beware. The Consumer Federation of America released its  2011 Consumer Complaint Survey Report today, and one of the top five fastest growing consumer complaints is home improvement scams, which remains number 3 on the top 10 list after automobile and debt-related scams.  Other real estate problems (timeshares, retirement communities) are new to the top 10 list this year.

Think you're too smart to be a victim? The report includes eye-opening anecdotes of scams from among the 38 state, county and city agencies in 22 states who contributed to the report, with tips on how to avoid being scammed. They recovered more than $147 million on behalf of wronged consumers last year alone. So if you have a problem, don't be shy about calling one of the consumer protection agencies listed on the  Federal Citizen Information Center's Consumer Action website.

If you're a homeowner (or renter), here are 10 ways to protect yourself.

Home Renovations Fraud: Shoddy construction work and contractors' failure to complete or even start a job continue to plague homeowners, according to the report. In one case, a Florida elementary school teacher gave a contractor $17,000 for an addition, but the contractor closed his business and fled the country before doing any work. The Pinellas County Department of Justice and Consumer Services tracked the contractor to Asia, and then when he was later in California, arranged to have him arrested and extradited to Florida. He made full restitution to the teacher.

Advice: Pay only a deposit when you contract for home improvement work (some states limit the percentage of the total job price that can be requested upfront). Get a written contract that sets out a payment schedule, proportionate to the work to be done. Don't pay the final installment until the work is done.

Itinerant Contractors: The Gloucester County Consumer Protection Office in New Jersey reported fake "asphalt" repairmen who demand payment upfront and then spray consumers' driveways with something that looks like asphalt but isn't, and in some cases enter consumers' homes and steal valuables. Chimney cleaning scams operate in a similar way.

Advice: Don't hire itinerant contractors that show up uninvited at your door. Contact the police with a description of the vehicle and license plate number.

"Free" Home Energy Audits: One Florida homeowner was pressured into opening a $5,800 line of credit to install an "energy-efficient radiant barrier" in his home after receiving a postcard in the mail purportedly from his local utility company for a "free" home energy audit. He closed the credit line before drawing on it.

Advice: Check with your utility company-many offer free weatherization assessment services-to make sure the services being offered are legitimate.

Unlicensed locksmiths: The Maryland Attorney General's Office and the California Department of Consumer Affairs both cited cases of unlicensed locksmiths preying on victims by using low estimates, disassembling locks, and then demanding more money to finish the job.

Advice: Ask your state or local consumer protection agency if there are licensing or registration requirements for home improvement contractors. If so, check that prospective workers are properly licensed (you can usually check online). Get a written estimate for services before work begins.

Home Security Alarm Scams: A 95-year-old Florida woman was convinced to sign a 5-year alarm system contract, although she already had an alarm system with another company. The Hillsborough County Consumer Protection Agency intervened; the alarm company canceled the $3,300 contract and refunded the money the woman had already paid.

Advice: Under federal law you have the right to cancel door-to-door purchases of $25 or more within three business days. If you're not given notice of this right, the cancellation period continues.

Home Furnishings Never Delivered: The Somerset County Division of Consumer Protection received 21 complaints from consumers who had paid more than $60,000 altogether at a New Jersey furniture store where the owner embezzled the money and never delivered the furniture. The business filed for bankruptcy offering little recompense for the consumers.

Advice: Pay with a credit card-that gives you the right to dispute the charges if the goods never arrive. Debit cards don't necessarily offer this protection.

Retirement Community Fees: When a Pennsylvania woman moved into an assisted living facility, she paid an upfront fee of $170,100 with the assurance that 85% would be refunded if she moved out, but when she moved out, the facility said she wouldn't get a refund until someone else bought her unit. The Bucks County Consumer Protection, Weights & Measures Office intervened, and she got back $168,644. The office found that in some cases, former residents' units were being used as models, holding up refunds.

Advice: Review the assisted living or retirement community contract carefully, including how the entry fee is handled-before you sign it.

Timeshare troubles: The Louisiana Attorney General's office is working on a multi-state action to get restitution and cancel timeshare contracts for consumers against Festiva, a timeshare company based in North Carolina but operating out of New Orleans. Consumers complained that they never received promised "prizes" and that "free" cruises ended up costing hundreds of dollars in fees. Consumer advocates are also reigning in folks who prey on people who already have timeshares, pressuring them to pay thousands of dollars to resell their unwanted timeshares, and yet another group that offers to recover fees that consumers have paid to timeshare resellers who have gotten no results. They take a fee and the consumer never hears from them again. An Ohio woman who paid $10,000 to timeshare reseller and resale recovery fee service got help from the Summit County Office Of Consumer Affairs to recover $3,000.

Advice: Don't be pressured into buying a timeshare especially if the salesman says you have to decide immediately. Got a timeshare and want out? Talk to the company that manages the timeshare or a licensed realtor.

Rental Rip-Offs: The Orange County (Florida) Consumer Fraud Unit found scammers posing as owners of foreclosed properties, advertising the properties for rent and taking deposits of $2,500 on average from would-be tenants.

Advice: Rent through a licensed realtor, or check county records (a call to the tax assessor works) to make sure you're dealing with the property owner.

Bedbug Problems: Increasingly tenants are complaining of bedbug infestations. Some landlords require tenants to pay a portion of exterminating costs. This may be legal if it's in your rental contract, depending on your state's law.

Advice: Check your lease for extermination clauses before you sign.  Notify landlords immediately of any insect problems, document that you did so, and contact your local health agency.