Contractor Asking for a Big Deposit Upfront? Read This First

" I'll need 50% to get started." "We need 75% for materials." "Cash or wire transfer works best." Then the contractor disappears — or does a day of half-hearted work and never returns. In one case reported to the BBB's Scam Tracker, a homeowner lost $18,500 after a contractor repeatedly demanded more money upfront.

Large upfront payments are among the most-reported contractor red flags in the country. Here's how the tactic works and how to protect yourself.

How it works

The contractor asks for a large deposit before any work begins — sometimes half, sometimes nearly all of the project cost. The justification sounds reasonable: materials need to be ordered, the crew needs to be scheduled. Payment is requested in the hardest-to-recover forms: cash, wire transfer, or a check written to an individual rather than a business.

Once the money is in hand, several things can happen. The contractor vanishes. The contractor does a small amount of visible work, then stalls while asking for more. Or the contractor was never a real business at all — just someone collecting deposits. Because cash and wires are nearly impossible to reverse, the homeowner has little recourse.

Federal consumer guidance is blunt on this point: be extremely cautious of any contractor demanding large payments before work begins. A legitimate, established contractor has credit with suppliers and doesn't need your life savings to buy lumber.

Red flags

• Demands of 50%, 75%, or full payment before work starts
• Requests for cash, wire transfer, gift cards, or payment apps
• Asks for a check made out to an individual instead of a business
• "Materials money" needed immediately, today, before you'll sign anything else
• No written payment schedule tied to completed milestones

What to do instead

• Keep deposits small — enough to show good faith, typically a small fraction of the total, with the balance tied to visible milestones.
• Never pay cash or wire money. Use a check or credit card written to the business name — both create a paper trail.
• Get the payment schedule in the written contract: what gets paid, when, and what work must be complete first.
• Verify the contractor's license with your state board before paying anything.
• Withhold final payment until the work is complete and you've inspected it.