How to Protect Yourself from Contractor Fraud: Lessons from a $37K Scam in Peel Region

Home renovations can be exciting, but hiring the wrong contractor can turn your dream project into a nightmare. A recent case in Peel Region highlights just how devastating contractor fraud can be.

According to CityNews Toronto, a contractor allegedly took $37,000 in deposits from multiple homeowners but never completed any work. Peel police are now investigating, and frustrated homeowners are left with empty wallets and unfinished projects.

Unfortunately, this isn’t an isolated case. Fraudulent contractors take advantage of unsuspecting homeowners every year, leaving them financially strained and without the renovations they paid for.

In this article, we’ll break down how to avoid contractor fraud, red flags to watch for, and steps to take if you’ve been scammed.

Understanding Contractor Fraud: How Does It Happen?

Contractor fraud typically follows a common pattern:

1. The contractor asks for a large upfront deposit. Legitimate contractors may require a deposit, but scammers often demand excessive amounts before any work begins.
2. They delay the project with excuses. Scammers frequently push back start dates, citing material delays, labor shortages, or personal emergencies.
3. They disappear after receiving payment. Once they have enough money, fraudulent contractors stop responding and vanish, leaving homeowners with no work done and no way to recover their funds.

This is exactly what happened in Peel Region. Homeowners thought they were working with a trustworthy contractor, but instead, they were left with financial losses and unfinished projects.

How to Avoid Contractor Fraud

1. Verify Licensing and Insurance

Before hiring a contractor, check if they are licensed and insured in Ontario. Ask for their business registration number and verify it through official channels like the Ontario Consumer Protection Act website or the Better Business Bureau (BBB).

2. Look for Online Reviews and References

Always research a contractor’s reputation before signing a contract. Check:

• Google Reviews
• Better Business Bureau (BBB) ratings
• Social media pages
• Past client references

If you see multiple complaints about uncompleted work or poor communication, it’s a red flag.

3. Never Pay a Large Deposit Upfront

Fraudulent contractors often demand excessive deposits—sometimes up to 50% of the total project cost. In Ontario, it’s recommended that homeowners never pay more than 15-25% upfront. Any contractor asking for a large sum before starting work should raise concerns.

4. Always Get a Written Contract

A clear, detailed contract protects both you and the contractor. It should include:

• A breakdown of costs
• Payment schedule
• Timeline for work completion
• Warranty details
• Refund policy for delays or unfinished work

Avoid contractors who refuse to provide a contract. Verbal agreements are not legally binding.

5. Check Their Previous Work

Ask to see completed projects in person or request photos and references from past clients. If a contractor has no proof of completed jobs, consider it a warning sign.

6. Ensure They Have a Physical Business Address

Scammers often use fake business addresses or operate entirely online. Always verify the contractor’s physical location by checking Google Maps or visiting their office.

7. Watch for Red Flags

Common contractor scam warning signs include:
🚩 No valid license or insurance
🚩 Refusing to provide references
🚩 Pressuring you to sign quickly
🚩 Only accepting cash payments
🚩 Avoiding written contracts

What to Do If You’ve Been Scammed by a Contractor

If you suspect you’ve been a victim of contractor fraud, take action immediately.

1. Document Everything – Keep copies of emails, text messages, contracts, and receipts.
2. File a Complaint – Report the fraud to:
   • Regional Police
   • Better Business Bureau (BBB)
   • Ontario Ministry of Consumer Services
3. Leave Reviews – Warn others by leaving detailed reviews on Google, HomeStars, and BBB.
4. Consider Legal Action – Consult a lawyer to explore options for recovering lost funds.
5. Warn Others – Share your experience on social media or local community groups to prevent others from falling victim.

Protect Yourself from Contractor Scams

The Peel Region contractor fraud case is a harsh reminder that not all contractors are trustworthy. By taking the right precautions—such as verifying licenses, getting written contracts, and avoiding large deposits—you can protect yourself from falling victim to similar scams.

Always do your research before hiring a contractor. If something feels off, trust your instincts and walk away.

Need a trusted contractor? Check out RenoAssist’s vetted professionals to connect with reputable and experienced renovation experts.