Telltale Signs That a Contractor Is a Fraud


Even though it’s already the 21st century, there are still people who are able to scam others and get away with fraud. One of the most vulnerable industries is construction. Contractor fraud includes carrying out substandard repairs or proposing services that intentionally cheat their clients. While some of these scams by contractors may seem so obvious in hindsight, their cheap tricks may not be as apparent at first glance especially because these fraudsters are typically smooth-talkers and charmers.

As home or business owners, it is vital to be vigilant of fraudulent behavior from your contractor. Take the time to conduct your research, for example, on what the process should be like or how much the materials should cost. Check out some of the telltale signs that a particular contractor is a fraud.

1. Letting you pay for bids and quotations

Legit contractors give quotes and their bids as a free service because they are confident in their abilities and standards. If your contractor asks you to pay before they give you a quote, then something’s wrong. Be on the lookout for low bids as there may be hidden fees somewhere along the road.

One way to avoid this scam is to get several bids and quotations from various sources. This will give you a general idea on what the correct market price is for the products and services you want.

2. Asking for the full payment up-front

In any business transaction, payments are generally done after the product has been given or the service has been provided. In construction, contractors customarily ask for a small percentage of the total cost as a down payment for the services that will be rendered. This is fine as it allows them to use your money to buy the materials that they need for your project. But, if your contractor is charging for the whole price up-front, that’s a red flag. It could be a sign that the firm is on unstable financial ground and may not be able to provide quality materials and services to you.

You shouldn’t be asked to pay more than 10% of the total job cost. This is considered as the standard initial payment price by contractors.

3. Vague contracts

Before pushing through with the project, you should speak with your contractor about the terms. A verbal contract won’t do you any good since there may be loopholes that the contractor can use to escape responsibility for the specific tasks that you both settled on.

There should be a written contract that includes all the items that both parties have agreed on, such as:

  • The scope of work, which is a list of all repairs

  • Precise labor and supplies cost, such as heavy equipment rental rates

  • Details about the job

  • Guarantees or warranties

  • The time frame for the completion of the project

  • How the contractor will handle unforeseen problems and extra work

4. No license and proof of insurance

Always ask for a copy of your contractor’s license and proof of insurance. If they cannot provide you with that or they keep on finding excuses to stall, it’s time for you to find someone else. All firms are required to get licenses. Moreover, legitimate companies acquire insurance to protect themselves.

After getting a hold of their license, check with your local government’s website if their permit is still valid and has not expired. Letting a contractor without license work in your home or office will hold you liable for any injuries that may happen during the project. Find trustworthy contractors who are responsible and diligent in updating their license.

5. Selling extra materials at a very low price

Another common trick by construction fraudsters is selling extra materials from another project to a different customer. Along with the material, let’s say extra asphalt, they would suggest that you have your driveway done and give you a too-good-to-be-true discount.

The extra material already causes suspicion since most legit contractors are meticulous at estimating how much products are needed for a particular project. Their customer is paying for it, after all.


Don’t be fooled by deals that are too good to be true. Often, these contractors will find a way to insert hidden fees to dupe you. Again, do your research before diving into a project or contacting a contractor. It pays to be knowledgeable.

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