WASHINGTON, Sept. 17, 2008 - The letter that appeared in a soldier's mailbox promised an offer almost too good to be true: a home improvement loan approved by Congress and backed up by a government agency.

Officials at the Federal Citizen Information Center fear it's a scam targeting military members that uses the center's credibility to lure victims in.

An eagle-eyed soldier notified the Federal Citizen Information Center after receiving the ad from the "Home Information Center" linked to post office boxes in Dallas and in Owasso, Okla. The letter included a reference to FCIC's Web site in an apparent attempt to show a federal endorsement.

"The thing that immediately sends up a red flag is the fact that [the advertisement] says these loans are approved by the U.S. Congress," said Mary Levy, director of consumer education and outreach in the FCIC's Office of Citizen Services. "Congress would absolutely never approve any particular home improvement loan."

In addition, she said, the Federal Citizen Information Center has no association with the Home Information Center. Levy emphasized that home improvement services are regulated at the state and local level, not by the federal government.

Levy expressed concern that the letter might be one of many floating around that are targeting military homeowners who, like many of their civilian neighbors, are struggling with financial concerns. Many are prime candidates for scams because they're young and relatively inexperienced in handling money, they're away from their extended families, and often have no roots in their new communities, she said. "That may make them particularly susceptible to these kinds of scams," Levy said.

Unscrupulous people have long focused their schemes on servicemembers and their families. Last year, the Federal Trade Commission and American Red Cross warned consumers about an identity-theft scam targeting families of deployed troops.

That scam involved someone calling a military spouse, identifying herself as a representative of the Red Cross, and notifying the woman that her husband was hurt in Iraq and had been medically evacuated to Germany. The caller then said doctors could not start treatment until paperwork including the husband's Social Security number and birth date was completed.

The FTC called this scheme a variation of "phishing" - a technique identity thieves use to get personal or financial information from unwary consumers. The identity thief claims to represent a trusted source - a bank, a government agency, or in this case, the American Red Cross - to get someone to divulge personal information.

"Military families can become targets of scams, especially when the soldier is deployed thousands of miles away and the family is here," Levy said. "That's why it's so important that they have the information they need to protect themselves."

The Federal Citizen Information Center offers consumers tips for selecting a contractor to make home improvements and repairs:

-- Get recommendations and references. Talk to friends, family and others who have used the contractor for similar work.

-- Get at least three written estimates. Insist the contractors come to your home to evaluate what needs to be done. Be sure the estimates are based on the same work so that you can make meaningful comparisons.

-- Check contractor complaint records. Your state or local consumer protection agency or Better Business Bureau can provide this information.

-- Make sure the contractor meets licensing and registration requirements. Your state or local consumer protection agency can help you find out what these requirements are.

-- Get the names of suppliers and ask if the contractor makes timely payments.

-- Contact your local building inspection department to check for permit and inspection requirements. Be wary if the contractor asks you to get the permit; it could mean the firm is not licensed.

-- Be sure your contractor is insured. They should have personal liability, property damage and worker's compensation insurance for workers and subcontractors. Also check with your insurance company to find out if you are covered for any injury or damage that might occur.

-- Insist on a written contract that states exactly what work will be done, the quality of materials that will be used, warranties, timetables, the names of any subcontractors, the total price of the job and the schedule of payments.

-- Try to limit your down payment. Some states have laws limiting the amount of down payment required.

-- Understand your payment options. Compare the cost of getting your own loan vs. contractor financing.

-- Don't make a final payment or sign a final release until you are satisfied with the work and know that subcontractors and suppliers have been paid. Some state laws allow unpaid subcontractors and suppliers to put a lien on your home for bills the contractor failed to pay.

-- Pay by credit card when you can. You may have the right to withhold payment to the credit card company until problems are corrected.

The FCIC warns consumers of red flags that could indicate a fraudulent operator, including soliciting door-to-door, offering a quote out of line with other estimates, using pressure tactics or asking for the entire payment up front.

The Consumer Action Handbook, published annually by the FCIC, offers additional consumer information covering a wide range of topics. The FCIC Web site provides ordering information.