How to safeguard seniors against home improvement scams in Canada

If you’ve caught the latest headlines, you've likely heard about contractors or companies that trick or exploit homeowners during home repair projects. These fraudsters especially like to target seniors (those aged 60 years and older) and other vulnerable people for acts of fraud and identity theft.¹

Sadly, more home improvement scams appear to be happening these days. In 2023, Canadians lost over $554 million to frauds and scams, and service scams continue to be one of the top frauds in Canada, with more than $22 million in losses. According to a recent survey of Ontario homeowners, a whopping 32% admit to falling for these scams, while almost half report knowing someone who’s been scammed.²

But how can you know if you're dealing with a trustworthy home renovation company or a fake contractor trying to scam you? Whether you’re a senior or a caregiver for an older person, read on to learn some of the most common red flags in home improvement scams — and how to avoid them. 

These days, grandparent/emergency scams, cyber fraud and romance scams aren’t the only kinds of trickery out there. Be on the lookout for these red flags in the home improvement and real estate realm.

Watch out for contractors who appear on your doorstep to peddle products or services at a discount. These impromptu offers can lead to scams, as reputable contractors don’t tend to engage in door-to-door sales or cash deals.

For instance, a scammer might offer you a deal because they “just happen to be in the neighbourhood” with surplus materials and equipment on hand.³ They may also offer to inspect your furnace, chimney or roof for free, and then claim urgent and costly repairs are needed.

In both cases, they may pressure you into making a decision right then, paying cash or signing a contract on the spot. People who’ve done this often complain of shoddy or incomplete work — or even that the contractor disappears with the cash. The so-called "doorstep deal" ends up costing the homeowner more in the end.

Beware of demands for a hefty upfront payment on your home improvement project. Reputable contractors always outline a payment plan based on project milestones in the contract, which is safer for everyone involved. If you fork over the funds right away, the person or company could take your money and then desert the project, leaving spaces half-done, unusable or damaged.

No paperwork — think written estimates, contracts, receipts, licenses, permits — is a red flag for a disreputable contractor and can be a recipe for disaster. Without a paper trail, it’s hard to prove your case if issues arise.

Trustworthy companies embrace transparency and abide by the law. They’re eager to show professional licences for qualified work and will get any required building permits or approvals. They also use written contracts to outline what both parties agree to. This document can help resolve disputes later on, especially if the matter lands in court.

With this home renovation scam, a person or company may charge too much for materials or labour. For instance, they may promise to use a certain grade of materials but then swap them with something cheaper or lower quality. Or they may add hidden fees and surprise charges to your final bill, significantly raising the overall cost of the project.⁶ 

Always be sure to get a written estimate that lists the costs of all products, labour and services the job will include. This can help protect you if, where you live, has laws that limit contractors from exceeding quotes. In Ontario, for instance, a contractor can’t charge you more than 10% above the estimated cost, unless you agree to new work or prices with a signed contract change.⁷

Likewise, in British Columbia, there's a law called the Builders Lien Act. It helps people like subcontractors and suppliers get paid for their work on a property, but also protects the property owner. So if, for some reason, a subcontractor or supplier doesn't get paid, the homeowner is responsible for paying a limited amount. They have to pay up to 10% of the total amount (called statutory holdback) plus any extra money owed under the contract that caused the payment problem. This ensures the owner doesn't have to pay more than a set percentage, even if there are issues with payments to others working on the property.

Remember, a trustworthy contractor is conscious of cost and will try to stay within your home renovation budget.

Before hiring a contractor, do a thorough background check — even if they were referred to by friends and family. Check their business registration number, credentials, references and reviews. You can even ask your home insurance company to refer you to a reputable home renovation contractor.

Before work starts, make sure they’ve obtained building permits and insurance coverage. You can also ask for criminal background checks for all employees and subcontractors. Doing this helps ensure you’re working with a reliable professional.

It’s easy to set up a phone number or make a business card or website — having these things doesn’t mean they’re a legitimate business.

Get multiple written estimates that include a description of the work to be done, materials, completion date and price. Don’t automatically choose the lowest bidder; instead, ask for an explanation if the price varies widely among the estimates. A quote that’s too low or too high may signal that something’s off. If you’re unsure who to trust, ask your home insurance company for a referral.

Never commit to a project on the spot. Take all the information you receive — written estimates, referrals, contracts — and think about it. Consult with trusted friends and family before making a decision.

Insist on paperwork and steer clear of dealing only in cash. Ask the company for proof of their business registration number, insurance coverage, and professional licences. You may also be able to verify some of these details online.

Ensure your contract includes vital details like their contact information, a project description, materials, warranties, the total cost, payment terms and schedule, and work schedule. The contract should also state who’s in charge of cleanup and whether they subcontract work, and who makes those payments.⁸ Get permits and approvals before the work starts.

Organize and store all paperwork and documents in a binder you can access at your fingertips. 

Don’t roll out the dough all at once! Limit down payments to around 10% of the total project cost, and confirm the total price in writing before the project begins.⁴ Include a payment schedule in the contract that’s tied to the completion of certain milestones. Roll out payments in chunks as the project progresses toward the finish line. Most credible home renovation companies can cover material costs without upfront full payments.⁵ Consider asking for receipts for purchased products or materials, depending on the scope of the project.

Never pay in cash or cryptocurrency, or with a wire transfer. Don’t let the contractor arrange financing for you. Scammers may try to talk you into taking out home equity loans or reverse mortgages to pay for repairs and arrange for the lender to pay them directly. You might think you’re saving a buck, but it could cost you if something goes wrong.

Don’t be shy about asking your contractor questions. The Canadian Home Builders Association has some sample questions, but here are a few things you may want to ask about:¹³

• What is the history of your company? What services do you offer?
• Can you share references from others who’ve had this type of work done at their homes?
• What is your insurance coverage, including workplace insurance for your employees? Do you carry workers' compensation and business liability insurance?
• Do you hire subcontractors or are your workers full-time employees?
• Will you take care of getting any needed building permits?
• How do we resolve disagreements or disputes?
• If I cancel the contract after the work starts, will I have to pay for any work or materials?
• What's the warranty on the work?
• Can I visit one of your current projects?

Never share your identity documents and personal details with others. To protect against title fraud, check your property titles for unauthorized changes or transfers. You can ask your lawyer to do a title search, or do one yourself using an online land registry database. Search for your property online once in a while to keep tabs on whether it’s fraudulently listed for sale or rental.¹⁴ Consider getting title insurance, a policy that protects against title defects, problems or losses related to the property’s title or ownership.¹¹

Make a habit of checking your credit reports and bank and credit card statements.¹² Report any suspicious activity related to Scotiabank accounts right away. Report any irregularities or concerns to the appropriate authorities, and seek legal advice if needed. 

READ MORE: Financing Your Home Renovations

If you suspect you’ve fallen for a scam, take a deep breath and then take these next steps:

• Document everything. Keep records of all contracts, estimates, communication (emails, texts, written notes), invoices, receipts and payments related to the home renovation project. Organize it all in a file folder.

• Contact the contractor. Reach out to the contractor to discuss your concerns and try to find a resolution. Take notes of what you discuss and when.

• Notify authorities. If alarm bells are ringing, consult local law enforcement, consumer protection agencies or the Better Business Bureau.

• Get legal advice. Consult a lawyer to understand your rights and explore legal options.

• Inform your bank. If payments went through a bank, notify them of the potential fraud and discuss what they might be able to do to help.

• If you have title insurance, contact your insurance company.

• Inform credit bureaus. Ask TransUnion and Equifax to put a fraud alert on your credit report. Check your credit report regularly.

Some people would rather “just let it go” and not report fraud to avoid embarrassment. But don’t brush it off if it happens to you — reporting home improvement scams helps authorities take action and stop it from happening to others. Your courage not only protects you, but it might also safeguard their next targets.

READ MORE: Financing Your Home Renovations