For years, unscrupulous contractors have manipulated homeowners into signing shady contracts that invariably lead to subpar repairs and fraud. The predatory practice not only victimizes consumers but also drives up insurance premiums.
Maryland is one of many states to seek a legal remedy and just yesterday approved a bill that will ostensibly deter the crime. In a move endorsed by the Coalition, Gov. Martin O'Malley signed a new law forbidding contractors from offering rebates.
"The door was slammed on a shameful ruse that lets crooked contractors [perform] shoddy and inflated repairs," says Howard Goldblatt, the Coalition's director of government affairs. "Prosecutors now have a focused legal tool that can better sweep cheating contractors off the streets."
Goldblatt deemed the law "a foresightful consumer protection," praising both Gov. O'Malley and the Maryland legislature, noting that SB 736 overwhelmingly cleared the General Assembly this year.
Shady contractors often use rebates of insurance deductibles to convince homeowners to sign contracts. Once in the front door, quite literally, dishonest contractors may try to defraud homeowners and their insurers.
"The money that contractors steal through the repair project can earn a profit that easily offsets the deductible they paid," Golblatt explains. "Contractors with good reputations do not need to dole out backhanded bribes to earn repair [jobs]. Rebating is a last-ditch ploy by often-incompetent contractors."
Post-Cat Cons
Rebating offers are especially common after storms sweep through neighborhoods and cause considerable home damage. These "storm-chasing" contractors are often unlicensed and out of state, the Coalition says.
The lure of saving hundreds of dollars can carry a certain appeal to distressed homeowners, who may urgently need repairs to damaged roofs or other parts of the home structure.
"Once contractors gain access to the home, they may demand a large down payment and then disappear without doing any work," Goldblatt says.
When inflated repairs are actually made, they often entail using substandard materials. In fact, the Coalition notes some contractors have even used tree limbs to enlarge holes in roofs and fraudulently inflate insurance bills. Fixing up poorly executed repairs can take an emotional toll on homeowners. Moreover, a homeowners' insurance policy may not be obligated to cover the cost of fraudulent repairs.
Goldblatt stresses the importance of educating consumers about the flipside of rebates. It's likely that other states may follow Maryland's lead, too.
"Public and private agencies should continuously educate homeowners about the rebating ploy and other contractor scams," Goldblatt says. "Educating consumers must happen well before storms strike. Once the storm hits and dishonest contractors swoop in, that may be too late."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.