SA warns of ‘insidious’ home construction scam

The watchdog is currently investigating reports of scammers masquerading as legitimate, licensed builders on websites and requesting hefty deposits for residential works before disappearing on the unfortunate victims.

The scammers will respond to posts on sites pretending to be a South Australian-based builder. They have mimicked business names and email addresses of legitimate businesses that operate in the state. The scammers seek a deposit for the work the consumer is requesting that is well above what is legally allowed in the state.

The scammers have even sent what appears to be a contract from the legitimate builder, with the builder’s branding, or have phone conversations with consumers pretending to be the lawfully operating builder. Reports indicate that the perpetrator or perpetrators seem to speak quite knowledgeably about construction work.

Once the deposit money has been transferred, the scammers invent delays for why the work can’t yet start, and eventually cut off all contact.

The watchdog has reported that at least three South Australians have been recently swindled out of nearly $60,000 in very similar circumstances.

Consumer and Business Services is advising anyone seeking contractors for building work to take extra care and conduct due diligence to ensure they are dealing with legitimate operators.

The agency recommends:

• Taking precautions when accepting a quote from someone a consumer has not met in person.
• Seeking multiple quotes for any work to gauge the general price. A significantly lower quote can often be an indicator of a fake offer.
• Independently sourcing contact details for any business a consumer is considering using, and contacting them directly.
• Understanding the legal limits for deposits. In South Australia, if the building work costs between $12,000 and $20,000, the deposit can be no more than $1,000. If the work exceeds $20,000, the deposit can be no more than 5 per cent of the total cost of the work.
• Keeping an eye out for red flags like unconvincing web links or grammar mistakes.

Acting commissioner for consumer affairs, Fraser Stroud, urged consumers to know their rights and “be especially vigilant when soliciting for building work online”.