RALEIGH, N.C. -- A Burlington kitchen remodeling company closed its doors, leaving several customers with unfinished work.
Attorney General Cooper filed a lawsuit against the company Monday, claiming the company took thousands of dollars upfront from consumers but failed to complete jobs.
“Businesses that take your money up front have an obligation to get the job done,” said Cooper. “Using payments from new customers to finance existing jobs is bad business and not sustainable.”
Cooper filed the suit against American Kitchen and its owners Robert Selfors and Tyler Justin Sheets seeking to ban them from offering home repair or home improvement services to North Carolina homeowners.
Cooper is also asking the court to require them to pay refunds to consumers who paid for work that was never completed.
FOX8's Carter Coyle talked to multiple homeowners Monday after finding out the AG filed this lawsuit.
They expressed relief the state was taking this situation seriously. They said they knew it could still take time to get their money back but were thankful for this first step.
According to the complaint, until last month American Kitchen offered kitchen remodeling services to North Carolina homeowners, requiring them to pay advance deposits of as much as $19,000 before the work began.
American Kitchen then hired subcontractors to do the remodel work but the company could not pay the subcontractors to complete existing jobs without recruiting new customers to pay more advance deposits.
According to the complaint, American Kitchen started to fail when the company was no longer able to bring in new customers to pay subcontractors and suppliers.
The unpaid subcontractors and suppliers recently filed liens against several customers’ homes, many of whose kitchen remodeling jobs remain unfinished.
Cooper’s Consumer Protection Division has received complaints from 38 homeowners who have lost a total of approximately $300,000 to American Kitchen.
Cooper’s office contends that the owners of American Kitchen previously owned a company called Kitchen Carolina that operated using the same business model and shut down in a similar manner in 2009.
Dispute Resolution Specialist Michael Henson with the Better Business Bureau in Greensboro was aware the lawsuit was filed Monday.
He said the lawsuit helps them understand the details and scope of the complaints against American Kitchen. However, it doesn't mean the BBB will stop taking in consumer complaints. They will continue doing that until the company files bankruptcy.
“If you plan to hire a contractor to work on your home, beware of anyone who demands large fees upfront,” Cooper warned.
To avoid problems with home improvement, Cooper offered the following tips for consumers:
• Avoid paying more than 10 percent of the total cost in advance.
• If you must pay fees in advance, use your credit card if possible in case you need to dispute the charge later.
• Ask to pay as the work is done, or once the work is completed to your satisfaction.
• A contractor who claims to need a lot of money upfront for supplies and materials may have poor credit or be in bad financial shape. If you wish to do business with such a contractor, buy the supplies and materials yourself and pay for the labor once the project is finished.
To report problems with a home improvement company or contractor or ask questions before hiring one, contact our Consumer Protection Division at 1-877-5-NO-SCAM.