Home-Repair Scam Complaints Mount

State and local governments are stepping up efforts to thwart scam artists who each year bilk older homeowners out of millions of dollars through phony home-repair schemes.

Homeowners are lodging increasing numbers of complaints against fly-by-night contractors who charge far more than the going rate for work on house interiors, roofs and driveways. Often, authorities say, the work is unnecessary, poorly done, partly done or not done at all.

"Older people are being targeted," says Pat Sainsbury, chief deputy of the King County, Wash., police fraud division, "because the victims are often home alone and become confused by fast-talking salesmen."

"And we're just seeing the tip of the iceberg," says David N. Kirkman, assistant attorney general of North Carolina, "because home improvement and repair fraud is rarely reported—especially among the elderly."

Officials in several states are stepping up enforcement efforts and attempting to enact stronger state laws because of disturbing reports of scams such as the one that recently victimized South Side Chicago resident Eula Johnson, 71.

A fast-talking home-improvement salesman came up with a list of work, including replastering walls and ceilings and repairing plumbing in the bathrooms. "He told me that all the work could be paid for from the money in my home [by borrowing against it]," says Johnson.

Immediately thereafter, "All sorts of people kept coming by to have me sign papers," she says. "I did everything they asked me to do." The result: Johnson found herself with a 20-year, $55,000 loan—secured by her house, at 15 percent interest—to finance the work.

She couldn't make the $715 monthly payments, and she faced foreclosure—which her lawyers are now fighting in court. Meanwhile, an inspection revealed shoddy and incomplete work.

It's easy to see why Johnson went along with the scam artists. "One [repair firm] man said that if I didn't sign the checks over to him, I would lose my house," she recalls. Johnson warns homeowners: "You need someone, like a lawyer, to look over any papers before you sign them."

The scams take a number of forms. In Raleigh, N.C., an 83-year-old widow recently hired itinerant workers to clean and rehang her gutters for $60. Once they were on the roof, the men said there were patches of rot—which was untrue. Then the supporting beams in the attic had to be fixed, they said, not to mention the potentially leaky basement. It went on and on.

The bewildered woman ended up paying the fix-it gang more than $16,000 for a few hours of work. Soon after they left, she discovered that none of the work had been necessary and that the con men had done nothing but make hammering noises.

Home repair is a $115 billion-a-year industry, and the vast majority of firms operate honestly. However, tens of thousands of fraud complaints are filed annually with state and local governments. Pennsylvania Attorney General Mike Fisher says home-repair fraud is now the number one consumer complaint among older residents in his state.

State and federal laws are typically inadequate or too poorly enforced to protect older residents, says Katie Smith Sloan of AARP. According to a 1998 AARP survey of home-repair contractor laws, 20 states lack laws requiring registration, licensing or bonding of firms.

However, some state and local governments are starting to launch counterattacks on scam artists.

The North Carolina Department of Justice helped pull together a task force of 37 state and local law enforcement agencies, plus the FBI, to bring down an interstate gang that had taken millions of dollars from hapless homeowners. The culprits received jail terms of up to 15 years.

The Nassau County, N.Y., prosecutor's office recently set up a sting operation by renting several houses in areas where many retired people live. The houses, which were all in perfect shape, were fitted with hidden cameras.

When con artists showed up, says Bob Emmons of the prosecutor's office, "the hidden cameras revealed that they were doing nothing at all except making busy noises." The tapes led to easy convictions.

Massachusetts has a new law that allows victims to recoup up to $10,000 in money paid to contractors who don't live up to their promises. All contractors have to be registered and pay a $100 fee. The fees have been put into a $2.5 million fund that can be tapped to reimburse victims.