Angie’s List Founder Angie
Hicks is in the process of calling on state lawmakers around the country to
enact uniform and understandable trade licensing laws. The goal is to create
laws that give consumers an assurance that anyone holding a license is qualified
to do the job it covers. Hicks is also asking lawmakers to set aside a portion
of licensing fees for consumer protection funds so homeowners who are bilked by
licensed contractors can recover their lost investments. Hicks will be sending
letters to governors across the country outlining the need for better trade
licensing laws.
“Most trade
licensing is too complicated and offers too little enforcement or protection,”
Hicks says. “Homeowners should be able to trust that if a governmental body has
given a license to a contractor, that the contractor is reliable and qualified.
They should also have access to some recompense if they rely on a licensed
contractor who doesn’t deliver, or worse yet, cheats
them.”
Angie's List
Companies Required to Comply
Hicks’s
call for better laws around the country coincides with a strengthening of
Angie’s List policies about trade licensing. The organization, which allows
consumers to post ratings of local service companies, has been in business since
1995. Traditionally, the company has relied on service providers to list their
trade license status and asked members to verify that status on their
own.
“Licensing
laws vary greatly across the country and even among cities within the same
state, which makes it hard for contractors to keep track of what’s required and
what isn’t,” Hick says. “Consumers don’t have a chance of figuring it out
without help. Consumers are still responsible for determining the license status
of the contractors they hire, and Angie’s List will be working to make it easier
for them. But the key to really accomplishing a better system will fall to
lawmakers.”
While
lawmakers may debate how – or if – to address the issue in their state, Angie’s
List is now requiring companies on the List to attest that they are in
compliance with state and local laws. Like the IRS, Angie’s List will audit
contractors to verify they are following the law. Those found to be out of
compliance will have an opportunity to comply or face actions from Angie’s List
that will include alerting members to their true
status.
Angie's
List communications director Cheryl Reed tells Remodeling that the auditing
efforts are a huge undertaking for Angie's List. "Before we made the
announcement, we reached out to our companies, explained our efforts, and asked
them to contact us," Reed says. "Our first wave will be to let them know what’s
going on and gather information, then we’ll post our findings. The
accountability process has always included human review, and this is a huge
undertaking. That’s an indication as to why it hasn’t happened before – it’s
really complex."
With a
process that already includes accountability and company review, and now the
infrastructure in place to handle the volume of work, Reed says Angie’s List is
well positioned to get started.
States' Responses
Will Take Time
Hicks
says it would be unrealistic to expect all states to adopt the same uniform
licensing law that requires minimum training and qualifications, proper
enforcement and consumer protection. A state-by-state approach is likely more
realistic. “Even if each state has different trade licensing laws, having one
direction per state to follow would be better than the mish-mash we have now,”
she says.
Most states
issue licenses for at least some contractors, including plumbers, electricians,
heating and cooling specialists, handymen, builders and remodelers. However, the
complexity of the issue is laid out in the September issue of the
Angie’s List Magazine:
- 15 states have state
licensing only
- 10 states have state
licensing and registration
- 9 states have state
licensing, as well as local licensing
- 4 states have state
licensing and local registration
- 2 states have state
licensing, as well as local licensing and local registration
- 4 states have state
licensing and registration, as well as local licensing
- 1 state has state
registration and local licensing
- 4 states (including
Washington D.C.) have local licensing only
Source: Angie’s List research of continental U.S.
trade licensing laws
“A current
trade license won’t guarantee that your contractor will complete your job
perfectly, but it will give you some insight into how your contractor handles
his or her business,” Hicks said. “In communities where licensure is required,
unlicensed contractors are breaking the law. If he or she breaks this one, what
others will they break? If the contractor doesn’t know he or she needs a license
to operate, what does that say about how on top of things he or she
is?”
In most
states, a valid license indicates the holder carries insurance and workers’
compensation, but you still need to be sure the contractor has adequate and the
right kind of insurance. In many cases, only licensed contractors are allowed to
pull permits. If your contractor wants you to pull permits for your project, you
should consider that a red flag and investigate further, Hicks
said.
Contractors
cannot acquire a rating on Angie's List until a member of Angie's List reports
on his/her interaction with the company. Once a company is added to the List,
Angie’s List contacts the company to provide information to be displayed in its
profile for member review that includes whether the company is licensed, bonded
and insured, as well as contact information and other details members find
helpful.