How to protect yourself from contractor fraud.
Bargain hunters beware, in tough economic times, buyers tend to search for "steals". Remember, deals too good to be true could end up costing you more in the long run. It is during these difficult times when we start to see companies go bankrupt. Here is a list of "bad situations" if you purchase from a company on the cusp of "Going out of Business"
1) Losing your deposit: Unfortunately, it is not uncommon for a contractor who is in a tough financial situation to use your deposit to pay their outstanding bills. Customers need to be careful of small businesses with very few employees and PO Boxes as their company address. Customers need to do thorough research on the company they intend to utilize. Good things to look for are customers with 5+ years in business, dedicated offices with real addresses, real people answering the office calls, sales people who have been with the company for 3+ years.
2) Losing your warranty: One thing customers often overlook is the importance of a warranty. Your warranty is only as good as the company behind it. If you purchase a sprinkler or lighting system from a company who goes out of business, your warranty is void. If you purchase a sprinkler or lighting system from a company that doesn't believe in high customer service, then you will always have to fight to get warranty items repairs or replaced. Whenever possible, try to purchase from a company who has done work for a friend or neighbor. Also, get multiple bids and be leary of companies who are 20-30% less than all their competitors.
3) Losing the company's insurance protection: The moment a company stops paying its insurance company is the moment you lose your insurance protection. Buying from a company with poor financial health may put you in a riskier situation than you thought.
Here is a list of things to look for in "safe" companies:
1) Real office address
2) Real employees answering the phone
3) Nice websites with current information
4) Companies who have been in business for 6+ years
5) Companies who have their employees in uniforms
6) Companies that advertise
7) Companies who have done work in your neighborhood before
8) Companies that specialize in your type of project
9) Sales people who have 5+ years of experience and have a long tenure with their company
10) Companies who are competitively priced against their competitors