Contractor fraud is one of the most common consumer scams in Canada. The Canadian Anti-Fraud Centre (CAFC) receives thousands of renovation fraud complaints each year. Victims — often seniors and first-time homeowners — lose thousands to tens of thousands of dollars to fraudulent contractors who take deposits and disappear, do shoddy work, or fabricate problems to extract more money.
This guide explains the most common contractor scams in Canada and how to protect yourself.
A contractor — often solicited door-to-door — offers a great deal on roofing, driveway paving, or other work. They ask for a large deposit (50–100% upfront) to "buy materials." They take the money and never return, or show up once and abandon the project. This is the most common renovation scam in Canada.
Protection: Never pay more than 10–15% as a deposit. Legitimate contractors have supplier accounts and don't need full payment upfront for materials.
After a major storm, hail event, or flood, fraudulent contractors canvass affected neighbourhoods offering fast, cheap repairs. They pressure homeowners to sign contracts immediately, take deposits, and deliver inferior work — or none at all. This is particularly common in Alberta and Ontario after hail storms.
Protection: Never hire a door-to-door contractor immediately after a disaster. Take time to verify credentials, get multiple quotes, and check reviews. Your insurance company may have preferred contractors.
A contractor starts work at a low quoted price, then partway through the project claims to have discovered hidden problems (rotted wood, faulty wiring, structural damage) requiring much more expensive work. They stop work and demand additional payment before continuing, knowing you're now vulnerable — your home is partially demolished.
Protection: A proper contract includes a change order process. Any additional work must be agreed in writing before proceeding. Get a second opinion on claimed hidden defects before agreeing to additional costs.
A contractor — often one you've already paid — threatens to place a construction lien on your property unless you pay additional amounts. While liens are a legitimate legal tool, fraudulent contractors use the threat to extract payments beyond what was agreed.
Protection: Understand your province's lien laws. Keep all payment records. A contractor can only lien for the value of work actually completed and materials supplied — consult a lawyer if you receive a lien or threat of one.
Particularly in larger projects with multiple subcontractors, dishonest general contractors may submit invoices for work not completed, inflate material costs, or bill twice for the same work.
Protection: Require itemized invoices. Do site walkthroughs before approving progress payments and verify that billed milestones have actually been reached. Keep records of all material deliveries.
A contractor offers a significant "cash discount" for payment in cash. While some contractors offer modest cash discounts legitimately, this tactic is often used to avoid HST/GST (tax fraud) and leaves you with no paper trail if something goes wrong. Cash payments also give you no recourse for chargebacks.
Protection: Pay by cheque or e-transfer — both leave a paper trail. Requiring a contractor to omit HST is illegal and makes you potentially liable. A large "cash discount" (10%+) is a red flag.
Some contractors perform electrical, plumbing, or gas work without the required licences. The work may look fine but fails inspection, creates safety hazards, or voids your home insurance.
Protection: Always ask for licence numbers for licensed trades. Verify them with the provincial licensing authority. Ensure permits are pulled and inspections completed — this is the homeowner's responsibility to verify, not just the contractor's.
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