Legislation addresses rising tide of home improvement fraud cases

House Bill 89, sponsored by Rep. Eric Morrison (D-Glasgow), would strengthen options for people to settle disputes with contractors they believe violated the terms of their agreement outside of court. It comes at a time when the Delaware Department of Justice ranked home improvement fraud as one of its top 10 scams of 2024.

Year over year since 2019, home improvement fraud cases have steadily increased, according to arrest statistics shared by the Delaware DOJ. In 2024, there were 73 arrests for home improvement fraud, the highest in the five-year period.

According to the bill, for consumers to see a resolution, they’d have to send the contractor a written notice trying to resolve any sort of dispute. Next, a consumer would have to send the DOJ a letter with their attempt to reach the contractor and their response, if the contractor responds at all. 

Should the contractor not reply within 20 days, the law would consider it a violation of the Consumer Fraud Act, which would carry financial penalties for contractors. Contractors could also lose their licenses. 

Additionally, someone who brings a private lawsuit against a contractor and wins, could get three times the amount of compensatory damages, if they went through the dispute process and a contractor denies a settlement.

Earlier this month, Spotlight Delaware reported on the rise in home improvement fraud and the case of Donna Brustman, a 75-year-old woman who paid $298,000 to contractors who never finished rebuilding her home after a fire.

In Wednesday’s committee meeting, Morrison began his presentation of the bill with a reading of Spotlight’s coverage and Brustman’s story. Following the introduction, he said home contractor fraud is becoming a “major issue” in the state, with no signs of slowing down. 

“Unfortunately, bad home contractors often target some of our most vulnerable constituents, the elderly, individuals with disabilities or diminished capacity to make decisions, minorities and individuals on the lower end of the socioeconomic spectrum,” Morrison said. 

Morrison also said that when one home contractor takes advantage of a consumer, it does damage to the reputation of all other contractors who do good work in the state. 

Additionally, Morrison said the bill is complementary to House Bill 57, another bill he introduced last month, that would put stronger regulations on home improvement contracts and give consumers more options to exit a contract after signing.

It would also add a clause that contractors convicted of two or more offenses would be barred from owning any contractor businesses in Delaware. The bill does say they’d still be able to do home improvement, so long as they are not in charge of operations. 

Rep. Cyndie Romer (D-Newark) said she was “very familiar” with Brustman’s case, since she’s her constituent. She also said she hopes the bill can “ease” some of the work for the DOJ’s fraud division, and allow people to see some relief. 

“Donna was absolutely taken advantage of, and the one thing she had really working for her is a niece who was dedicated and really took this on to make sure that her aunt was protected in any way she could,” Romer said. 

On Wednesday, all of the representatives who were present at the meeting voted to release the bill from committee. In a phone interview after the meeting, Morrison told Spotlight Delaware since the bill has a fiscal note, it will next be considered in the House Appropriations Committee sometime in May.