Purpose: Reduce fraud in the residential service market. Compile and provide useful information to assist homeowners in their search for quality contractors.

Contractor fraud and misrepresentation are rampant in the residential service markets. The following information is provided as a public service to help homeowners avoid the con men when they are looking for contractors.

Section 1  How to research contractors before inviting them out to your home.

Section 2  How to verify a license.

Section 3  How to verify a business.

Section 4  When they tell you they don’t need a license.

Section 5  Common characteristics of residential contractor scams.

Section 6  True stories about “contractors” that made the news.

Learn as much about a contractor before inviting him into your home. It’s good business to do so and reduces your risk of making a costly mistake.

To find out if the contractor you are considering for the project is licensed in the trade(s) that will be performed, click on the link below. Once you arrive at the license verification site notice that you have an option to search for an individual person or a company business name (DBA-doing business as). If you know the owner’s name enter his name in the proper field after selecting “person”. This will insure that you are using the proper search engine.

If the owner’s name is not known select the “business” option and enter the name of the company as stated in their advertisement, business card, or estimate form. Enter the company name in the “name” field. If “no results” appear after the search is complete go and perform a new search for business and enter the company name in the “DBA” field. If “no results” are your search results the company is not licensed.

If the contractor claims to be licensed, his license number will appear in your search results. Double click on the search results for more information and you will find out who the license holder is, such as, what trades or services he is licensed in, the year he qualified and tested for the license, if there are any complaints, and if the license is active, invalid or suspended. Remember you can always ask for the license number from the contractor and type it in the search engines field.

Click here to verify a license with the State of Michigan.

To find out if the company is incorporated and that it exists legally click on the site below. Once there, enter the name or partial name and all operating corporations in the State of Michigan with that name will appear. Double click on the search results and you will get detail information about the officers and owners of the corporation. Look to see if they are an “active” corporation. If no data is found and the contractor is using a company name that indicates that they are incorporated (Inc.) you just discovered a false misrepresentation in his advertising, a red flag, and illegal.

Newspapers and other like publications do not screen their advertisers for false statements.

These publications include telephone directories, service directories, online referral services, church bulletins, coupon mailers, and other publications that sell advertising space. “Buyer beware” is their motto while they look the other way.

Click here to verify that a business is Properly Registered through the State of Michigan

The following services need to qualify for a State of Michigan License (compiled from the DLEG website):

• Carpentry (A)
• Concrete (B)
• Excavation (D)Insulation Work (G)
• Masonry (I)
• Painting & Decorating (J)
• Siding (K)
• Roofing (M)
• Screen & Storm Sash (N)
• Gutters (O)
• Tile & Marble (P)
• House Wrecking (R)
• Swimming Pools (S)
• Basement Waterproofing (T)

What's the difference between a "residential builder" license and a "residential maintenance and alteration contractor" license?

The residential builder may build a new home from the ground up or may do any kind of repairs regulated under Article 24 of the Occupational Code. They may contract for the whole job, but will have to subcontract for plumbing, electrical, and mechanical (heating, ventilation, air conditioning) work to licensed plumbing, electrical and mechanical contractors. The residential maintenance and alteration (M&A) contractor is licensed to perform only specific trades and services and may accept contracts only in the trade(s) or craft(s) for which he or she is licensed. The residential maintenance and alteration contractor wall license and pocket card identifies the trades for which the M&A contractor is licensed. The pocket card only has room for a letter code representing the trade or trades in which that contractor is licensed.

Click here to get more information on this subject at the DLEG website.

Low Balling - A contractor provides you with a low or very good price only for you to find out once the work begins, or shortly after, that more monies are needed to complete the project.

Vague contracts - Scope of work is not descriptive enough to avoid issues once work begins. Topics most often left vague are; payment terms, labor performance standards, scope of work, and quality of materials to be used.

Fictious business or corporation name - Company does not exist legally. Company only exists on its business card and contract forms.

Contractor demands payment early - Contractor changes agreed upon payment terms, demanding payments while indicating the need to stop work if payment is not made. Usually preceeded by stories of his problems that are forcing him to pressure you to make payments sooner than the agreement calls for.

Misleading permit information - Contractor misleads the homeowner with misinformation about the need to pull a permit. If the homeowner pulls the permit he accepts all legal responsibility for any cost to correct code violations. If the contractor pulls the permit and does not pass the building inspection he must correct the code violations at his cost.

Misleading license information - Contractor misleads the homeowner with misinformation about the need to be licensed as a business and which employees need to be individually licensed. Many times a company will claim to be licensed in their advertisements and on their business cards when in fact they are not. They do so to appear legitimate, and since all consumer advocate groups continually encourage consumers to only hire licensed contractors. (See section on researching your contractor.) Also, be on the lookout for a company that is licensed in one trade but is seeking projects in another trade.

Bloomfield Township, MI- Carpet cleaner swallows diamond ring left in the bathroom by a mother of two. Mother calls the police; police perform a background check on the carpet cleaning company’s crew. One employee has a criminal background and admits to swallowing the ring. The ring was recovered and the mother was not sure if she wanted to wear it any longer.

Young teenager Elizabeth Smart, lives in Utah, she was kidnapped from her bedroom in her home after her mother hired a person to work on her roof. A little known fact is that the parents had also hired a contractor, from a referral, for a previous project. This contractor died in jail under suspicion that he had abducted Elizabeth. Until his dying day he claimed innocence in the abduction. His fingerprints were found in the Smart’s home where it had no business being. The police investigated and found that the contractor had been in prison. The suspect admitted to stealing from the Smart’s and was jailed for parole violations. The real abductor was found a few months after the suspect died.

David Lettermen’s painter was arrested for plotting to kidnap his child and nanny. The painter had a criminal record.

On an ABC’s 20/20 news segment it was reported that an elderly man hired a painting crew, who was in his neighborhood, to paint his barn. The deal was to paint the barn for $500.00 and $50.00 per five-gallon bucket of paint used. The victim tells the story that the barn was painted quickly by about ten men. They then presented a bill for $3,500.00. The man protested the amount and was escorted over to the workers van where they opened it up and showed him stacks of empty five gallon buckets totaling sixty each. The victim goes on to say that he felt intimidated and paid the amount to get the men off of his property.

The National Association of Consumer Agency Administrators, their reports show that home improvement consistently ranks as one of the top consumers complaints. Contractors out rank car salesmen and automotive repair in the percentage of complaints received.