Attorney General Announces Lawsuit Against Roofing Company Suspected Of Defrauding Denver, Colorado Springs Homeowners

DENVER — Colorado Attorney General John Suthers announced today that his office’s Consumer Protection Unit has filed a complaint against a Denver-based company, its corporate officers and other related entities on suspicion of violating the Colorado Consumer Protection Act and the Uniform Consumer Credit Code through an aggressive door-to-door roofing scheme. The operation, according to the complaint started operating in April 2007.

“This company used particularly aggressive door-to-door sales techniques, often targeting older homeowners with official-looking roofing ‘inspectors,’” Suthers said. “It should have been clear to these defendants that they could not deliver on their marketing promises.”

The company, Claim Specialists International, Inc., later reformed as K2 Roofing and Construction Company, and its officers are suspected of engaging in deceptive trade practices starting in April 2007 to secure roofing contracts and insurance money. According to the complaint, the defendants ran a door-to-door operation targeting homes following hail storms in the Denver metro area and Colorado Springs. According to the complaint filed in Denver District Court, the companies would venture door to door following the hail storms and ask homeowners if they would like a free roof inspection. Following the free inspection, the pitchmen pressured homeowners into contracting with Claim Specialists International, Inc., or the K2 Roofing and Construction Company to repair their roofs. Many of the roofs, though, were never repaired even after Claim Specialists International, Inc., or the K2 Roofing and Construction Company had accepted money from the homeowners’ insurance companies, according to the complaint.

When consumer complained that the company had failed to do the roofing work within eight weeks as they were often promised the company refused to give out refunds. In some cases, the company tried to force consumers to remain in the roofing contracts by invoking a 20 percent cancelation fee. The companies also refused to allow homeowners to cancel their contracts within three days after signing he contract, as allowed under Federal Trade Commission rules and Colorado law.

After word of Claim Specialists International’s business practices spread, the company’s corporate officers dissolved the firm in February 2009 and incorporated the K2 Roofing and Construction Company to continue their operations. The Office of the Attorney General and the Better Business Bureau received more than 140 complaints from consumers detailing more than $440,000 worth of roof repairs the companies never completed over the past year.

Claim Specialists International, its corporate officers and other related entities are also suspected of using unlicensed insurance adjustors to inspect roofs and determine the cost of repairs.

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“Consumers should never enter into contracts based on a door-to-door sales pitch,” Suthers said. “Coloradans interested in having work done on their houses should follow several basic steps in finding a legitimate contractor to repair their roofs or complete other projects.”

Suthers said consumers should:

  1. Never do business with a contractor who just shows up on your doorstep.
  2. Never allow a stranger to “check out” any part of your home, including letting them inside for an inspection. They might be looking for valuables to steal.
  3. Get at least three quotes from local contractors for any improvements or repairs on your home. (The local Better Business Bureau is an excellent resource to check out local businesses.)
  4. Obtain a written agreement from the contractor specifically addressing the work that will be done. The contract should include an estimate of how much you will be required to pay for the work.
  5. Never pay a contractor an advance fee. For major home repairs or other substantial projects, if a contract insists on payment, agree to partial payment throughout the progress of the work as clear benchmarks, laid out in a written contract, are met.

Consumers who encounter door-to-door scams should report them to their local police, sheriff’s department or district attorney’s office. Consumers also can file a report with the Office of the Attorney General via telephone at 1-800-222-4444 or via e-mail at stop.fraud@state.co.us.

Learn more about home-repair scams at the Office of the Attorney General’s Web site: http://www.ago.state.co.us/consprot/CoResourceGuide.cfm.html#home_repair.

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