Contractor fraud involves deception for financial gain in the construction industry, such as overcharging, selling bad parts, or not completing work. Warning signs include cash-only payments, no license, and no written contract. Reporting fraud is crucial, and governments have anti-fraud departments to investigate and prosecute offenders.
Contractor fraud is a type of fraud against homeowners or contractors in connection with building improvements. Most contractor fraud occurs in the context of renovations, expansions, or major plumbing or electrical work. Contractors will overcharge customers or extort money to get the job done; they will sell and install bad parts or just take money for a job they never performed. In many places, even trading without a license is a violation of current fraud laws. Different jurisdictions define fraud differently, but fraud always centers around blatant deception.
It takes more than shoddy work to constitute contractor fraud. A contractor who does shoddy work may be sued for default or breach of contract, but is not liable for fraud unless he has done some sort of blatant misrepresentation or used the contractor as a means of extorting money. The crux of fraud is willful deception for tangible gain.
Contractor fraud, also commonly called housing fraud or home renovation fraud, involves shady financial transactions in the construction industry. The simplest example is a contractor who agrees with a homeowner to build an addition, say, or renovate a bathroom, but never gets the job done. This type of contractor typically requests some or all of the money upfront, then disappears without even lifting a hammer.
Other times, contractors will start renovations — tearing down walls, ripping out appliances and the like — but then ask for more money to continue. They will often cite unexpected costs, more expensive materials, or an original “misunderstanding” as reasons why more money is needed to proceed. With their homes in disarray, landlords have no choice but to pay whatever the contractor demands. Often times, scams like this can double or triple the agreed cost of construction work.
Identifying contractor fraud before it happens isn’t always easy. However, there are several warning signs. A contractor who only accepts cash payments, for example, is probably not legitimate. Likewise, a contractor who insists that a certain price is only good that day, or only for a limited time, might try to pressure a client into using his services.
A contractor who does not have a government-issued contractor’s license should be questioned, as should a contractor who is unwilling to obtain the necessary building permits for the project he proposes to undertake. Any contractor who says that a written contract is not necessary or who refuses to put the terms of his work in writing may be wrongful. The best way for home and business owners to protect themselves from contractor fraud is to be very proactive when it comes to selecting a contractor, ask lots of questions, and get a list of references.
It is often very difficult to remedy contractor fraud once it has been committed, but it is not impossible. Reporting fraud is the first step. Almost every jurisdiction in the world has fraud laws and governments are usually very interested in prosecuting offenders.
Most local government agencies have anti-fraud departments where residents can file complaints against contractors they believe are engaging in fraudulent practices. Many complaint forms are available online. Once a complaint has been processed, the department will likely open an investigation and may be able to prosecute the contractor if it can be located. If nothing else, reporting fraud can help prevent others from falling victim to the same scams.
Protect your devices with Threat Protection by NordVPN
