Examples of Contractor Fraud

The high cost of a job well done has lent itself to seeking more affordable alternatives wherever one could find them. This phenomenon affects a wide variety of different industries, including construction. Contractor fraud is a broadly-used term that covers a wide variety of illegal business practices committed by contractors. The exact kind of fraud committed can run the gamut between a wide variety of schemes. Below are some of the most prominent examples of contractor fraud:

Upfront Payments

Upfront payments, especially cash payments, are the primary red flag when hiring a contractor. The fraud committed in this scheme is devastatingly simple: they take the money and run. Other variations involve the contractor claiming they were never paid at all, only to threaten legal action against the client when the repairs have been finished and paid for.

Inferior or Removed Materials

One of the most common forms of contractor fraud lies in the materials. Fraudsters will often switch materials for substantially lower-grade materials and pocket the difference of the cost. Using cheap materials can lead to expensive and unsafe consequences, such as system or structure failure. On the other hand, fraudsters may also slip in materials for their own personal use.

Misleading Contracts

Contractors will often give their clients a verbal and physical walkthrough of an area that needs to be worked on. The contractor will detail certain aspects that need fixing and begin to describe how they intend to fix it. These walkthroughs are often promising and detailed – then the client is presented with a contract. Most clients will simply sign the contract not knowing that what was verbally told to them and what they’ve legally signed up for can be very, very different. It’s a common misleading tactic.

Improper or No Permits

In some cases, a contractor may need a permit to be able to repair or modify any part of a home. It is their responsibility to seek this out. If a contractor does not obtain these permits or if they obtain the incorrect permits, a client could be left responsible for undoing the work that was illegally done. This kind of fraud is largely driven by laziness on the part of the contractor.

Endless Work

As some contractors work on a client’s home, they will often “find” new issues that need fixing. Finding more work is not out of the ordinary, but it becomes suspect over time. Problems that continue to arise and add cost to what was initially an affordable project are a common extortion tactic, as the contractor will claim the project cannot be completed without fixing the unforeseen issue first.

In many cases, the best defense to a contractor fraud charge is to argue that the underlying dispute is not really a criminal matter and should be dealt with in civil court. Contact our law offices today to schedule your consultation.