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Don’t Get Nailed: How to Protect Yourself from Contractor Fraud

The Salientino family of Shoreham, Long Island, did what families sometimes do when a new baby arrives: a major home renovation for the growing family.1 The Salientinos hired a contractor in 2025 to remodel their large, beautiful home. The contractor gutted their house as planned, accepted $96,200 to order flooring, appliances and other new materials — and then disappeared.

Contractor fraud left the Salientinos with more than a financial loss — the family of five was stuck living in a camper for months. With their entire home gutted and exposed wires everywhere, it wasn't even safe for their small kids to go inside.

The Salientinos' story is shockingly common. Once their story aired on their local news, other families came forward with similar experiences.2 The same year, a Pennsylvania contractor gutted a woman's basement, took $12,ooo, and disappeared.3 In another 2025 case, West Virginia officials charged a contractor with taking $48,200 from seven homeowners for incomplete projects.4 Similar recent stories exist in Minnesota, Missouri, Florida and beyond.5 6 7

Incomplete work is just one type of contractor fraud, but the scam takes many forms. It's no wonder the Federal Trade Commission (FTC) received 81,925 reports of home improvement fraud in 2024.8

Here's what homeowners should know about contractor scams, what they look like and how to avoid them.


What Is a Contractor Scam?

Contractor scams, also known as home improvement scams, are, according to the FTC, when a home contractor performs a range of fraudulent actions: "They may do shoddy work, damage your home, overcharge you, or just take your money without performing any services."9


What Kinds of Contractor Scams Are There?

Home building and improvements require complex work, including technical knowledge, licensing, pulling permits from governmental bodies, following contract language and more. Homeowners often overlook some necessary work, creating opportunities for scammers to cut corners and pocket cash in many ways. These include:

  • Starting, but not completing a job.

  • Not pulling the necessary permits from the local government.

  • Offering door-to-door repair services after a natural disaster and collecting a deposit without being a contractor at all.

  • Not having credentials, or illegally presenting a legitimate contractor's credentials as their own.

  • Misrepresenting the price or quality of materials.10

  • Overbilling for services not performed.

  • Making false claims about the financial impact of the improvements.11

  • Escalating costs once a project is underway.12
Eyeball with dollar sign icon
The contractor gutted their house, accepted $96,200 to order flooring, appliances, and other new materials, and then disappeared.

How To Avoid a Contractor Scam

The FTC offers these red flags to watch for when considering hiring a contractor:9

  • Someone knocking on your door offering to do work because they are “in the area.”

  • Getting an offer for discounted work using materials left over from a previous job.

  • A contractor pressures you for an immediate decision.

  • A supposed contractor requiring full or suspiciously large payment up-front and/or only accepting cash.

  • A contractor asks you to get any required building permits.

  • They refer you to a non-traditional lender they know for financing.

Not all contractor scams come with these red flags, however. Take these steps to screen all contractors before signing a contract:9

  • Get real contractor recommendations. Read online reviews but also ask people you know and trust about their experiences.

  • Confirm all contractors are licensed and insured as required by their state and service offering. Do an internet search to confirm the legal requirements in your state for the type of services you're hiring for. Your state or county government should be able to confirm a contractor’s license if required. Ask all contractors for proof of insurance.

  • Vet the contractor through your local Home Builders Association, the Better Business Bureau and consumer protection officials.13 14 If they have complaints against them, these entities should know. Not being affiliated with these organizations isn't necessarily a deal-breaker, but it should trigger the need to do more vetting on your own. Do an internet search for the company or individual’s name with words like "scam," "review," or "complaint."

  • Get multiple estimates. A legitimate contractor begins all work with a written estimate, which should include a description of the work, materials required, completion date and the price. Ask for an explanation if there’s a big difference among the estimates, especially from the lowest bidder; a low bid can be a ruse to lure you in.12

  • Read the contract. Though contract requirements vary by state, always ask for one. Before you sign, make sure the contract includes:
    • The contractor’s name, address, phone number and license number.

    • An estimated start and completion date.

    • Any promises made during conversations or calls related to issues such as the scope of work and the cost of labor and materials.

    • To comply with the FTC's buyer's remorse rule, a written statement of your right to cancel the contract within three business days, if you signed it in your home or anywhere other than the contractor's permanent place of business.

    • No blank spaces in the contract.15

  • Don’t pay in full up front. Never make the final payment until the work is done and you’re satisfied with it.

Approach Home Improvements With Care

Homes are so important, from both an investment standpoint and to our overall quality of life. That's one reason home improvement scams can be so harmful. Whether it's a small bathroom upgrade or a major addition, approaching each project and potential contractor with thorough research and careful deliberation can help you protect your investment and your home.

If you believe you've been the victim of a contractor scam, the FTC recommends contacting:9

If you're having issues with a contractor, but you're not sure if your issue rises to the level of a scam, the FTC's dispute resolution programs can help you advocate for yourself or get advice.17

Important disclosure information

Asset allocation and diversifications do not ensure against loss. This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Stacey Sager, "Family devastated after contractor guts home in Shoreham, abandons it," ABC 7 New York, published June 4, 2025. Accessed January 14, 2026. Back
  2. Stacey Sager, "Contractor accused of swindling LI homeowners charged with fraud," ABC 7 New York, published June 25, 2025. Accessed December 4, 2025. Back
  3. Briana Smith, "Delco contractor allegedly scammed residents out of thousands of dollars," ABC 6 Action News, published July 18, 2025. Accessed December 4, 2025. Back
  4. Austin Simms, "Raleigh County contractor charged with multiple counts of fraud and grand larceny," Loot Press, published October 16, 2025. Accessed December 4, 2025. Back
  5. Corin Hoggard, "Dozens of families victimized as Minnesota contractors face $1.5M fraud accusations," Fox 9 KMSP, published October 14, 2025. Accessed December 4, 2025. Back
  6. Dillon Seckington, "Missouri AG files felony fraud charges against contractor for uncompleted repairs," Fox 4 KC, published October 16, 2025. Accessed January 14, 2026. Back
  7. William Reynolds, Jesse LaCoste Of Cantonment Convicted Of Grand Theft, Contractor Fraud, NorthEscambia.com, published October 17, 2025. Accessed December 4, 2025. Back
  8. Federal Trade Commission, "Consumer Sentinel Network Data Book 2024," accessed December 4, 2025. Back
  9. Federal Trade Commission, "How To Avoid a Home Improvement Scam," FTC Consumer Advice. Accessed January 14, 2026. Back
  10. Office of Inspector General, "Common Fraud Schemes," U.S. Department of Transportation. Accessed December 4, 2025. Back
  11. Federal Trade Commission, "FTC Sends More Than $2.9 Million to Consumers Harmed by Home Improvement Financing Firm," FTC Press Releases, published July 8, 2025. Accessed December 4, 2025. Back
  12. Julia Kagan, "Contractor Fraud: What it is, Signs of it, Avoiding it," Investopedia, published October 30, 2021. Accessed December 4, 2025. Back
  13. Better Business Bureau website, accessed December 4, 2025. Back
  14. USA.gov, "State consumer protection offices," accessed December 4, 2025. Back
  15. Federal Trade Commission, "FTC’s Cooling-Off Rule," accessed December 4, 2025. Back
  16. Federal Trade Commission, "Conflict Resolution," accessed December 4, 2025. Back
  17. "Federal Trade Commission: Consumer Advice," accessed January 14, 2025. Back