Contractor Fraud in Denver & Colorado Springs: Spot the Red Flags

If you’re like most people, your home is not just a place to sleep, it's a significant and expensive investment. Whether you're building a new home or renovating an existing one, you’re making a substantial financial commitment to your property’s future. 

Thus, you inevitably rely on the integrity of your contractor, whether you’re remodeling or building.

Unfortunately, contractor fraud is not a rare occurrence. In 2024 alone, consumers in Colorado filed a staggering 915 complaints related to home services and repair work with Colorado’s attorney general.

In this article, I will provide tips on how to spot contractor fraud and what to do if you get scammed.

Contractor fraud can take many forms, including the misappropriation of a construction project’s funds, failure to complete work, substituting materials of inferior quality without homeowner approval, and performing unlicensed work, among others.

When you put money down for a construction project, the contractor is legally obligated to hold those funds in a trust to pay for subcontractors, laborers, and materials. Colorado law treats unauthorized uses of these funds as theft. C.R.S. 38-22-127  

A violation of this statute can result in both criminal and civil penalties for the contractor.

The problem with contractor fraud is that victims often don’t recognize the scam until it has already happened. The good news is that most bad contractors tend to show the same red flags. The following are common red flags I see in my practice.  

It’s normal for a contractor to request a deposit before beginning work on a project. The down payment signals that the client is committed to the project and can afford it. Initial deposits also help contractors hire subcontractors, order materials, and fund other necessary expenses. 

If you’re unfamiliar with the construction industry, you may not be aware of what a reasonable deposit is. But there is a line, and bad contractors tend to cross it. Most contractors require an upfront payment of 10 to 25 percent of the job’s total cost. Anything more than that could be a sign of a contractor scam. 

 If you find yourself in a situation where you've paid half or all of the estimate and your contractor took the deposit and ran, Colorado law offers protections under C.R.S. 18-4-401 and C.R.S. 38-22-127. These laws can help you recover your losses. As a general rule of thumb, don’t accept a deal that requires you to pay for a service you haven’t fully received. 

No one likes a bait-and-switch. Unfortunately, many bad contractors quote one price and then invoice for much more. 

For instance, a contractor might claim to have discovered a structural issue that requires expensive repairs, or they might add extra charges for materials that were initially included in the quote. Cost creep in bad faith is contractor fraud. The Colorado Consumer Protection Act expressly prohibits contractors from inflating costs by failing to disclose terms and conditions at the point of sale. 

You have a right to know key details about the goods and services your contractor provides. If your contractor sends you a final bill that far exceeds the initial quote, speak with a consumer protection attorney in Colorado. 

Another sign of a contractor scam is that issues seem to appear out of thin air. Here’s why:

Initial inspections enable contractors to identify potential issues that may arise during the project, which helps them take measures to mitigate unforeseen problems.   

Fabricating sudden, “unforeseeable” problems to inflate costs is contractor fraud. 

Before you begin your project, if your contractor doesn’t ask questions or inspect the project area, you should consider finding someone else to do the work. Never sign an agreement with a contractor who has not fully inspected the site and provided a comprehensive bid.  

The Front Range in Colorado is renowned for its severe hailstorms, which can cause significant damage to homes and businesses. The Federal Trade Commission warns homeowners to be cautious of salespeople going door-to-door after major storms, as this can be a sign of a roofing scam. Verifying a roofer’s credentials can help you avoid a bad roofing contractor from taking your insurance money and disappearing on you.

The key to any successful project is good communication. If a contractor is hard to reach, doesn’t return calls, or gives unclear answers, it is usually a sign of bigger problems. Effective communication is essential for understanding the progress of the project, addressing any concerns, and ensuring that the project stays on track. 

Contractors should clearly explain their process, timelines, and costs in a manner that is easy to understand. Pay attention to how they respond to your questions during the estimate stage. Someone who dismisses your concerns or avoids details before the project starts will likely be challenging to work with once the job begins.

Any reputable contractor in Denver should be proud to showcase their past work and share the names of satisfied clients. If they hesitate to provide references or only offer vague examples, that’s a red flag. 

Ask for contact information for a few recent customers and follow up with them directly. A lack of positive feedback—or no online presence at all—is a sign of inexperience or poor performance. Take extra care if most reviews mention missed deadlines, hidden costs, or unfinished projects. Consistent, recent positive reviews are a good indicator that you’re dealing with a professional. 

If a contractor’s estimate seems too good to be true, it probably is. A significantly lower bid than others could signal that the contractor plans to use substandard materials, rush the job, or skip necessary steps, such as obtaining permits or inspections. Some contractors underbid intentionally to win the project, only to tack on “unexpected” costs later. You should carefully compare bids, ask for a detailed breakdown of materials and labor, and be cautious of anyone who pressures you to accept a low offer immediately.

A strong contract protects both parties and ensures the project stays on track. If a contractor resists putting terms in writing or presents a vague agreement, don’t sign before having an attorney review it. 

The contract should clearly spell out the project’s scope, materials, payment schedule, change order procedures, and start and completion dates. Avoid working with anyone who insists on a verbal agreement or glosses over details. Ambiguity in a contract benefits the contractor—not the homeowner.

Professionalism matters as much as skill. If a contractor is rude, dismissive, or frequently complains about other clients, take note of this behavior. Also, showing up late without notice—or missing appointments altogether—is a warning sign. A good contractor respects your time and treats you and your project with care and consideration. If they’re careless or disrespectful before the work even starts, it’s unlikely things will improve once the job is underway. 

Colorado property owners should be vigilant when hiring contractors. Our firm has seen people scammed out of their savings by companies like Adamo Homes. Now defunct, Adamo Homes has been sued dozens of times by casualties of the company’s fraud, including by some of our clients. While it may feel like bad contractors have won, I can assure you they have not. Working with a lawyer who specializes in real estate litigation and contract law can help you recover your deposit from a fraudulent contractor in Colorado and possibly more for your trouble.  Here are some legal options to recover your losses: 

• Civil Actions – Pursuing a lawsuit is an option when a contractor fails to obtain proper permits or commits other instances of fraud. If you need to know how to sue a contractor in Colorado for unpermitted work, we can help. We strategically apply the law to your circumstances to achieve the best possible outcome, including the potential for treble damages and attorney fees. 

• Contract Rescission – Getting out of a contract isn’t easy, but there are legal remedies for cancelling one. With our support, you may be able to be relieved from your contractual obligations. 

• Mechanic’s Lien — When contractors misappropriate funds and don’t pay their subcontractors or suppliers, the homeowner often ends up with a lien filed against their property. We can help you mitigate the fallout of this action.

• Construction Defect – If the contractor’s actions resulted in property damage, we can file a claim under the Construction Defect Action Reform Act (CDARA). This action applies to a wide range of construction professionals who may be responsible for the defect. 

• Criminal Prosecution – In the most egregious cases of contractor fraud in Colorado, an attorney can help their client file a criminal complaint with the appropriate law enforcement agency for theft. 

• Settlement Agreements – Negotiating a settlement is a powerful option for recovering your losses and seeking additional compensation. Since a judge can enforce the agreement if the contractor defaults, we will draft a comprehensive settlement that is court-enforceable and fully protects your interests..

An attorney will advise you on necessary procedural steps, including the required notices and statutory deadlines, to give you the best chance at recovery.

Don't let contractor fraud cost you another dollar or another day of stress.

If you've spotted red flags—or if the damage is done—it's time to fight back. Our contractor fraud attorneys in the Denver and Colorado Springs areas specialize in leveraging Colorado's laws to pursue civil remedies, including the potential for three times your actual damages. Book a consult online today or call 303-688-0944.