Home Improvement Fraud

For Immediate Release
July 17, 2008
For More Information, contact:
Chris Gaal, Office of the Monroe County Prosecuting Attorney, 349-2670

PROSECUTOR ANNOUNCES NEW PUBLIC EDUCATION CAMPAIGN TO PREVENT HOME IMPROVEMENT FRAUD

Bloomington, IN – “Your home may be the biggest and most important investment that you will make in your lifetime,” says Monroe County Prosecuting Attorney Chris Gaal at the beginning of the new video produced by the Elder Crimes Task Force. “There are plenty of skilled and competent home improvement and repair contractors in our community,” Gaal continues. “Unfortunately, there are also a few bad apples who engage in home improvement fraud.”

Gaal hopes the new video will empower consumers with information to help prevent home improvement fraud from occurring in the first place, “It is far better to prevent these problems than to respond after the fact when the victim’s money has disappeared.” The video will be part of a public education campaign in collaboration with Indiana Legal Services that will include public presentations around the community along with other printed materials.

“The problem can be very serious,” agrees Marcy Wenzler, an attorney with Indiana Legal Services who helped write the script for the video with Gaal. “Home improvement fraud isn’t just about poor quality work or the loss of some money. In some cases it can have an adverse affect on a consumer’s credit rating or even result in the loss of their home through foreclosure.”

The video is broken down into various topics presented by a range of experts from the community, including local attorneys, construction contractors, and government officials. For example, Chris Sturbaum, Bloomington City Council member and owner of Golden Hands Construction, talks about questions to ask when interviewing potential contractors. Lisa Abbott, from the City of Bloomington’s Housing and Neighborhood Development Department discusses how to check with former clients listed by a contractor as references. Steve Percy, local contractor and owner of Sierra Remodeling, presents the section entitled “Red Flags To Watch Out For.”

The video also presents information about legal and financing issues. “Indiana now has a law that requires home improvement contracts above one hundred and fifty dollars to be in writing and contain certain minimum terms,” explains local attorney Joe O’Connor in the video. Yet according to O’Connor many contractors and consumers do not use written contracts, often because they don’t know about the new law. “Our hope is that by educating people about the new law, people will start putting their home improvement contracts in writing and we can avoid many problems and misunderstandings in the future.”

Fred Schultz, President of the Monroe County Bar Association, in his section on payment issues, emphasizes the cardinal rule– Never pay for the entire job up front. “If people take away that one sentence from the video and remember it, the whole project will have been well worth it,” said Schultz.

Given the rise in home foreclosures and massive flood damage in Indiana, Marcy Wenzler, Director of the Indiana Legal Services Housing Law Center, believes the information provided in the Home Improvement Loans section will be especially valuable and timely. “People need to know how to avoid getting in over their heads when they finance home improvements.”

Other sections include local attorney Geoff Grodner on liens, Jim Gerstbauer of the Monroe County Building Department on building permits, and attorney Jamie Andree on local resources to help resolve problems with home improvement contractors. The video highlights the fact that Indiana Legal Services provides free legal assistance for people age 60 or older and can be reached at 339-7668.

The video also describes a contractor mediation program intended as a new community resource to help informally resolve disputes with home improvement and repair contractors. Ed Greenebaum, retired professor of law at Indiana University and Programs Director of the Community Justice and Mediation Center (CJAM), describes how mediation can save time, money, and anxiety by avoiding lengthy, expensive and contentious legal proceedings. “Mediation is a voluntary process in which mediators help people resolve disputes in creative ways that meet their needs. Experience shows people usually comply with agreements that they have created themselves and that they feel are fair,” says Greenebaum in the video.

Chief Deputy Prosecuting Attorney Bob Miller provides the video’s finale by describing when home improvement fraud may rise to a criminal offense that should be reported to police for investigation, “By reporting criminal home improvement fraud you can also help prevent it from happening to others in the future.”

In addition to airing on community access television, the Office of the Monroe Count Prosecuting Attorney will be distributing free DVD copies of the film to social service groups, health care providers, churches and other organizations concerned with the needs of the elderly population. Organizations wishing to receive a free copy can contact the Office of the Monroe County Prosecuting Attorney at 349-2670.

Our opinion
Guard yourself and your neighbors against fraud
Seniors particularly at risk from fast-talking con artists posing as home improvement contractors

July 22, 2008

As if flood damage weren’t enough, another peril can strike consumers during the summer months: home improvement fraud.

The Indiana Attorney General’s office reports that 280 complaints regarding home improvement or remodeling were filed in 2007, and 140 have been filed so far this year. And those are just the reported cases.

Often, the victims are unaware they’ve been taken — or too embarrassed to report it.

Elderly citizens are especially targeted by fly-by-night contractors. First, these smooth talkers convince the trusting homeowner that the driveway repaving or window repair or tree-trimming is needed. Then, they charge too much or charge in advance. In the end, the work is either shoddy or incomplete, and the contractor is nowhere to be found.

Indiana has a strong home improvement fraud law, requiring written contracts for jobs of more than $150. The law makes it easier for victims of fraud to obtain relief against unscrupulous contractors.

While legal redress is important, the best defense against consumer fraud of the home improvement variety is education. Monroe County prosecutor Chris Gaal’s campaign to distribute the video “Home Improvement Fraud: What You Need to Know” to area churches, senior centers and health care providers is a laudable effort to reduce the potential victimization of homeowners by would-be contractors.

We encourage area organizations to take advantage of this free resource and to air the video at least once this summer. To obtain a copy for your group, call 349-2670.

Guest column
Advice from prosecutor can help you avoid home improvement fraud
August 21, 2008
The Herald-Times

This guest column was written by
Monroe County Prosecuting Attorney Chris Gaal

Your home may be the biggest and most important investment that you will make in your lifetime, and keeping it safe and in good repair is important. But not everyone has the ability or the time to do all the tasks necessary to maintain and repair their homes, or to take on a major home improvement project.

There are plenty of skilled and competent home improvement and repair contractors in our community. The key is to find the right one for you, who will perform quality work in a timely manner at a reasonable price. Unfortunately, there are also a few bad apples who aren’t interested in operating legitimate businesses and engage in home improvement fraud, and that can lead to serious consequences. Home improvement fraud isn’t just about poor quality of work, or the loss of some money. In some cases it can have an adverse effect on a consumer’s credit rating, and even result in the loss of their home through foreclosure. Here are some tips to help you protect yourself as a consumer.

When choosing a contractor, do your research. Know what work you want done and have a realistic budget before you sit down to talk to contractors. Get referrals. Talk to friends or family members who have had similar work done. Get their recommendations. Take your time. Look for a contractor with a permanent business location and a good reputation in the community.

When you do sit down to talk with contractors, be prepared to ask questions. How long have they been in business? How many similar projects have they completed? Get names, addresses and phone numbers of past clients as references. Do they have insurance? Will they use subcontractors? How long will the project take? Get at least two written estimates and carefully compare costs and materials.

Make sure to check with references. Were they satisfied with the work performed? Was the project completed on time? How were problems resolved? Would they recommend the contractor and use them again?
Watch out for contractors who require payment for the entire job up front, or who only accept cash payments. Be wary of door-to-door solicitations and contractors who create a sense of urgency and pressure you for an immediate decision. Other red flags include failing to obtain a building permit for a major structural remodeling, or not being listed in the telephone directory.

The most important rule is: Never pay for the entire job up front! Reputable contractors should only require a down payment, and not full payment in advance.

Indiana now has a law that requires residential home improvement contracts in excess of $150 to be in writing and to contain certain minimum terms. Many people are unaware of this relatively new law. You can avoid misunderstandings and prevent future problems by putting your agreement in writing.
Regarding financing: Do not agree to a home equity loan if you don’t have enough money to make all the monthly payments. You should receive a “Truth in Lending Disclosure Form” when you take out a loan. This form will contain the true interest rate, the amount you’re borrowing, all the finance charges, the total of all payments, the amount of payments, and the date when payments are due.

Make sure you understand any loan documents before you sign, and if you need it, get help from someone you trust before signing loan documents. Shop around and compare loan terms to get the best financing available.

If you do run into problems with a home improvement or repair contractor, there are places to go for help in the community. Indiana Legal Services offers free legal assistance to low-income people and to people 60 or older — call 339-7668. The Community Justice and Mediation Center offers trained mediators who can help people creatively resolve contractor disputes informally through voluntary mediation, without the time and expense of a lawsuit — 336-8677.

Under certain circumstances, usually involving misrepresentation or deceit, home improvement fraud can be a crime. If you believe you have been the victim of criminal home improvement fraud, contact the police for an investigation. By reporting home improvement fraud, you can help prevent it from happening to others.

If you want to learn more, the Elder Crimes Task Force of the Monroe County Prosecuting Attorney’s Office has produced a video that explains home improvement fraud in greater detail. The video is available on Community Access Television (CATS), and can also be obtained by calling the prosecutor’s office at 349-2670.