Unlicensed contractors feel the sting of the law

Police arrest an unlicensed contractor during a sting in California. (Photo courtesy of the California Contractors State License Board)

Police arrest an unlicensed contractor during a sting in California. (Photo courtesy of the California Contractors State License Board)

The undercover officers were ready. Staged in a San Diego area home, members of the Contractors State License Board Statewide Investigative Fraud Team in April invited dozens of suspected unlicensed contractors to bid on a home improvement project. One by one, they came into the home, put in an offer for the work and, when they failed to produce a valid contractor's license, were arrested on the spot — 35 offenders in total.

Each state and local licensing board across the country has its own procedures for catching unlicensed contractors. Some rely on consumer tips or work with building officials to ensure legality when a permit is pulled. Others perform random checks at work sites. However, all are limited by budget and staffing constraints, leaving the actual law enforcement running the gamut from barely there to nearly everywhere.

California operates one of the most ambitious efforts, conducting covert sting operations every week. The CSLB estimates the work done by unlicensed contractors supports an underground economy worth $60 billion to $140 billion a year — most of which is not taxed or insured. "Our tolerance is very low," says CSLB spokesman Rick Lopes. "They're breaking the law."

Similar enforcement efforts in Florida took center stage recently after Department of Business and Professional Regulation Secretary Charles Drago learned unlicensed contractors were a top concern of state residents. "I've heard from consumers and licensees who have been harmed financially," Drago says. "Their stories have motivated us to increase our efforts."

During a sting in California, law enforcement runs a background check on each contractor to search for outstanding warrants, and everyone is given a licensing application packet. "We're not trying to put them out of business," Lopes says. "We're trying to get them to follow the law." While most violators are issued a citation and fined, unlicensed contractors busted more than once spend a mandatory 90 days in jail.

New York doesn't license home-improvement contractors at the state level, but Westchester County last year passed a law giving police the authority to impound contractors' vehicles and equipment, resulting in less unlicensed activity. "We mean business when it comes to cracking down on unlicensed contractors," says County Executive Andy Spano.

In New York City, the number of complaints have dipped while the number of licensed contractors continues to rise thanks to aggressive enforcement, including raids and confiscation, according to Beth Miller, spokeswoman for the Department of Consumer Affairs.

Hiring an unlicensed person can have dire consequences. "These unlicensed individuals don't pay taxes, have insurance on their workers or bonds," Lopes says. "It's not unusual for them to be involved in other illegal activities as well. They also make it very difficult for licensed contractors to compete."

"Unlicensed contractors put [homeowners] at personal and financial risks," agrees Jay Carlson, president of the Florida Home Builders Association. "Consumers often become victims, and the livelihood of law-abiding, licensed contractors is threatened.

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Unlicensed contractor scams Raleigh homeowners, gets jail time


Brian Keith Kelly (Photo courtesy of Gaston County Sheriff's Office)
Brian Keith Kelly (Photo courtesy of Gaston County Sheriff's Office)

Unlicensed home improvement contractor scammed his way through North Carolina and left a path of shoddy work in his wake, authorities say. When they caught up with him, he had racked up more than 45 complaints statewide for his plumbing, HVAC and electrical work.


One of the great philosphers said "be careful not to pass a multitude of laws or you will end up with a multitude of criminals." The state has no interest at all in protecting the people from contractors. The state's one and only motive is money. Money generated by the license fee and the money generated by the tax that they are not getting from the contractor. If it weren't for the money, you could completely forget about the State doing anything. The State only uses the "protect the people" slogan as a scape goat for the real reason they are going after the contractors and raping them. Patrons, you will be paying twice as much for your repairs now than you did before the State protected you. I HOPE YOU FEEL SAFER!

This is really ultra stupid. Yes, I understand it it's something expensive, you should irk with a licenced one. But if it's something that'll cost $400 for a licensed one and $150 for an unlisencedl one, I'll take my chances. Chances are, it'll be just fine. Come on, gimme a break.

Hi, I am a California licensed general B1 contractor with an additional C6 cabinetry classification and I do cabinet refacing in San Diego. The bottom line is, whenever you deal with an unlicensed contractor YOU HAVE NO LEGAL RECOURSE if anything goes wrong with your project. I re-did a job for one poor fellow who had paid out over $5,000.00 to learn this lesson the hard way.

I agree that not all contractors are stand up guys, But in California we have to go through an FBI and DOJ background check, to make sure we are not on Megan's list, do not have any Violent crimes or construction related crimes, we have to pass a business law test and the tade test, to qualify for the test you have to pass the background check and have a signed form from a contractor or qualifying individual. You have to have a bond for at least $12,500 to even get your license issued to you. Now my feeling is why would you not hire a licensed contractor?

We all know every, single, licensed contractor is a stand up guy with no criminal record. Please. Follow the $$.

i agree, where i live you pay $50 and fill out a small form and boom! you could know nothing bout the trade and still get licensed!

Contractors in westchester are really expensive can cost you about $500 a day.. and they pay to they workers maximum of $120 a day.. the rest of the money is for the contractor.. in this area the consumers are looking for unlicensed contractor they take the risk and save up to $300 per day

better yet, it sounds like everyone should have to licensed to work at any job. This way we can all give up even more income to the government, which will ultimately take no responsibility even if they license and inspect.

We know that licensing cost consumers as well. First the license fee is passed on to the consumer. Second most consumers are under the impression that the state or locality really makes sure a contractor is qualified....this is NOT the case. Just like your driver's license, they are not there to keep you safe or make sure you do a good job, they are there to get their cut of the money, safety be damned. When was the last time you were asked to take a driving test? License regs are just another form of government extortion. "Pay us off or go to jail! and we will make you look bad to the public, even though we never really cared about anything but getting your money."

As a licensed contractor, what protection is given to us? MHIC licensing department does not care to represent us, if we are the ones asking for an arbitrator.

More police more government more regulations. More loss of freedom in the name of freedom

Hi Felix I read the article about the unlicensed home inspector. The magazine article has a picture of his business card, which has the ASHI logo. I informed Jeff Arnold, CEO of ASHI. They are looking into this ethics violation.

This California Contractors Association is working hard to bring the unlicensed into compliance and strengthen the industry and legitimate Licensed businesses thru information, legislative and legal endeavors. http://www.gouca.org

I just read September article regarding poor Allison Stack, who had a terrible experience with her home inspector, (Michael McKinney) who claimed top be licensed and honest. It makes me sick that good people like Allison put her trust into someone who is suppose follow the Standards of Practices and Ethic rules. Allison should look at this business card and see if belongs to one of the following creditable association. ASHI American Society of Home Inspectors, National Association of Certified Home Inspectors (NACHI) or National Association of Home Inspectors, Inc. (NAHI) If he does, file a complaint with that association, and allow someone from that department follow up with him. Hopefully he will told, he can no longer be a member of that association. As a home inspector, not only do I take pride and enjoy my work, but I educate my clients on all the condition which will affect their home and budget. I hope Allison is enjoying her new place, in spite of all the issues. Best of Luck, Felix pena

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