Commissioner's Blog: Pitfalls of paying tradies upfront
When you hire a tradesperson to undertake a home renovation or maintenance job, they might ask for a deposit upfront to confirm the booking or cover any materials they need to order.
While tradespeople are legally allowed to ask for deposits, there are a few things we want consumers to know before paying them.
A common issue reported to Consumer Protection is traders who demand large deposits – or even full payment upfront – then fail to complete the agreed work, leaving consumers both out of pocket and without the work done.
We recently prosecuted the owner of an air-conditioning business for failing to supply goods and services after taking deposits as high as 60 per cent from several customers. Vernen Naicker, trading as Desti Cool AC, was subsequently fined $15,000 by the Perth Magistrate’s Court.
Dodgy tree lopper Sean Weinthal is another trader who continues to attract complaints and enquiries from consumers who in many cases have been pressured to pay for the work upfront and never receive a written quote, invoice, receipt or any other proof of the transaction as required by law.
Paying upfront for goods or services puts consumers at risk if the business fails to deliver or goes broke. That’s why we recommend only paying smaller deposits of about 10 per cent to limit that risk and to have greater bargaining power if something goes wrong.
For larger jobs, we recommend paying in instalments as goods are delivered and stages of the work are finished. In Western Australia, it is illegal for tradespeople to accept deposits of more than 6.5 per cent for building work valued at more than $7,500.
Paying by credit card is an option worth considering as it provides the protection of getting a chargeback if the goods or services aren’t delivered.
Don’t forget that if you invite any tradesperson to your home just for a QUOTE, they will be breaking consumer law if they don’t observe a ten business day cooling off period before starting the job and collecting payment.
Consumers who pay a deposit but don’t get the goods or services can lodge a complaint on the Consumer Protection website. Enquiries can be made by emailing firstname.lastname@example.org or calling 1300 30 40 54.
Commissioner for Consumer Protection
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