Attorney General: Iowa law requires certain contractor disclosures and practices to protect consumers—especially storm damage victims
DES MOINES – An interstate roofing contractor who does business in Iowa has agreed to change several business practices and release court judgments against customers through an agreement with Attorney General Tom Miller.
James Nelle, owner of Roof One Exteriors LLC and Roof One of Iowa LLC, both registered in Winterset, agreed to the assurance of voluntary compliance last week after Miller alleged several consumer protection law violations involving consumer contracts, disclosures and business practices.
Nelle denies the allegations, and Miller notes Nelle cooperated fully in resolving the matter.
Nelle also operates in Kentucky, Michigan and Missouri.
Iowa Insurance Division Referred “Storm Chaser” Case to Consumer Protection Division
In April, the Iowa Insurance Division referred the matter to the Consumer Protection Division after a central Iowa consumer who sustained storm-related roof damage complained to a Des Moines television station last year about being threatened with an $8,000 charge for backing out of a $32,000 roof repair contract—a contract missing key terms, disclosures, and a final estimate when she signed it.
“After looking into the matter, we were concerned about several business practices we often see in so-called ‘storm chaser’ cases, where contractors aggressively solicit door-to-door business following bad storms and natural disasters,” Miller said. “In this case, a consumer stared down an $8,000 penalty after not wanting to move forward with an open-ended, incomplete contract peppered with missing information crucial to the consumer—including key terms and amounts—when she signed it. That’s not the way Iowa law allows contractors to operate—especially when dealing with storm victims.”
Consumer Protection Division Alleged Illegal Business Practices
The Consumer Protection Division alleged that Nelle and his business, Roof One, violated several consumer laws, including:
- Negotiating a roof damage insurance claim on a consumer’s behalf
- Failing to provide a fully completed copy of a consumer contract, and omitting required information such as the contractor’s address, scope of work, total cost
- Failing to provide required and valid notices of a consumer’s right to cancel
- Failing to honor a consumer’s right to cancel
- Enforcing an estimate as a binding contract
- Enforcing a cancellation fee that amounts to 25 percent of the total contract
- Threatening to file a debt collection lawsuit with no intention of doing so
“While we sought to address our concerns specific to this case, we also hope to send a message to all contractors who seek business from Iowans trying to repair or rebuild following a storm or natural disaster,” Miller said. “We expect contractors to follow our consumer protection laws, even if they think other contractors are violating the law or cutting corners.”
Advice for Consumers
- Check out the contractor before you sign a contract or pay any money. Ask if the contractor is registered with the Iowa Workforce Development's Division of Labor Services. You can check a contractor's registration online through the Division of Labor Services website, or call 1-800-562-4692 or 515-242-5871). Be sure to check local references. Also, check Iowa Courts Online for past court cases, and see if there are complaints on file with the Better Business Bureau and the Attorney General's Consumer Protection Division.
- Get it in writing. Seek several written estimates for the job you want done. Before any work begins, agree on a written contract detailing work to be done, responsibility for permits, costs, and any other promises. Request a copy of the contractor's liability insurance certificate. Put start and completion dates in writing and consequences if the contractor fails to follow them (example: the contract could be nullified if the contractor doesn't start on time.)
- Avoid paying large sums in advance to a contractor. If you have to make a partial advance payment for materials, make your check out to the supplier and the contractor. Insist on a "mechanic's lien waiver" in case the contractor fails to pay others for materials or labor.
- In most cases, Iowa's Door-to-Door Sales law gives you three business days to cancel a contract signed at your home.
Advice for Contractors
- A consumer contract must contain all of the material terms, and be fully disclosed to the consumer before the consumer signs the contract – and the contractor must leave a complete copy with the consumer after it is signed.
- While a contractor can advise a consumer on what work and materials are needed to repair storm damage, the consumer must be the person to negotiate the insurance claim with the insurance adjustor or the company.
- If the Iowa Door-to-Door Sales Act applies to the sale, the seller must use the proper language and format required in Iowa, and provide the proper Iowa cancellation forms at the time of sale. (Use of any other form could result in the voiding of the contract as well as civil penalties.)
- A seller cannot include provisions in a contract that materially misrepresent the legal rights of either party, even if the seller has no intention of enforcing the misrepresentations.
- A person collecting on a consumer debt cannot threaten to take action that the collector has no intention of taking.
- If the contractor intends to enforce the document as a contract, the document must clearly and conspicuously disclose that it is a binding contract before the consumer signs it.
- State law prohibits price gouging when a county has been declared a disaster area.
Consumers with questions or complaints can contact the Consumer Protection Division:
- Web: www.iowaattorneygeneral.gov
- Phone: 515-281-5926 (toll-free number outside of the Des Moines area: 888-777-4590)
- Email: firstname.lastname@example.org