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Risky business: Officials warn homeowners of unlicensed contractors

Posted: March 23, 2009 1:48 a.m.
Updated: March 23, 2009 4:55 a.m.

A sting operation has netted seven alleged illegal contractors working in the Santa Clarita Valley, and state officials are warning homeowners to beware of hiring unlicensed workers.

"Many consumers don't realize the risk they take when they hire a phony contractor to work on their home," said Steve Sands, registrar for the Contractors State License Board in California.

"With the tough economic times, unlicensed operators seem to be even more aggressive in their methods of going after business," Sands said.

A sting operation earlier this month dubbed "California blitz" resulted in the arrests of 107 alleged illegal contractors, including seven in the valley.

"We are seeing (illegal contractors) become more aggressive," said Rick Lopes, Contractors State License Board spokesman.

The state contractors board worked with the Los Angeles County Sheriff's Department and the Fraud Division of the California Department of Insurance to snag the unlicensed contracting businesses, according to a news release.

In the stings, board investigators posed as homeowners and invited suspected unlicensed operators to bid on various construction jobs ranging from landscaping, fencing and concrete to cabinets, roofing and painting.

"The main way we find them is advertising," Lopes said. "By law, (contractors) are required to have their state license numbers in advertising, whether in print, on television or on the side of their truck."

Illegal contractors are those who operate without a license and in some cases never pay taxes to the state. While the lost tax revenue worries the state, unlicensed contractors scam people out of cash, Lopes said Friday.

"Their sole objective is to get the down payment," Lopes said. The fake contractor often gives the homeowner a quote well below market value and then asks for half the money up front for a down payment.

Once the homeowner hands over the down payment, often in cash, the unlicensed contractor is never seen again, Lopes said.

By law, all contractors who perform work that totals $500 or more (labor and materials) must be licensed by the state contractors board.

Unlicensed contractors are part of a large underground California economy that estimates put between $60 billion to $140 billion per year, Lopes said.

The licensing board urges consumers to be wary of door-to-door home improvement services. Homeowners should verify the contractor's license online at or call the board's automated phone service at 1-800-321-CSLB.

The licensing board advises homeowners to never pay more than 10 percent down or $1,000, whichever is less. Don't pay in cash, and don't let the payments get ahead of the work.

Homeowners should also check references; get three bids and a written contract.

Contact CSLB about a complaint against a contractor.


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