Contractor Fraud

AAA

DEFINITION of 'Contractor Fraud'

Illegal business practices committed by firms hired to reform, renovate, repair or build residential properties. Contractor fraud is typically carried out by small firms promising quick repairs or upgrades for below market prices. The work is usually substandard, unnecessary or may even cause damage to previously undamaged parts of a home. The victim of contractor fraud is often pressured into paying for the work through threats and intimidation.

INVESTOPEDIA EXPLAINS 'Contractor Fraud'

Contractor fraud often ends up costing the victim twice because they get taken in by the fraud and then have to pay a legitimate firm again to bring the work up to standard or repair the damage. Organizations like the Better Business Bureau have made it harder for these fraudsters to prey on informed consumers, but some fraudulent contractors continue to target vulnerable groups like the elderly by going door to door.

RELATED TERMS
  1. Medicare And Medicaid Fraud

    Illegal practices aimed at getting unfairly high payouts from ...
  2. Invitation For Bid - IFB

    When a company or organization provides detailed project specifications ...
  3. Major Fraud Act Of 1988

    A piece of legislation passed during the Reagan administration ...
  4. Subcontracting

    The practice of assigning part of the obligations and tasks under ...
  5. Mortgage Fraud

    Intentionally falsifying information on a mortgage loan application. ...
  6. Corporate Fraud

    Activities undertaken by an individual or company that are done ...
RELATED FAQS
  1. Who sets the global standard to stop money laundering and how is it implemented?

    The Financial Action Task Force (FATF) sets the international standard for fighting money laundering. Formed in 1989 by leaders ... Read Full Answer >>
  2. Why does fighting money laundering reduce overall crime?

    Money laundering is the process of converting funds received from illegal activities into ostensibly clean money that does ... Read Full Answer >>
  3. Why would a homebuyer need to take out PMI (private mortgage insurance)?

    Most conventional mortgage lenders carry strict requirements for home buyers, including credit history and score minimums, ... Read Full Answer >>
  4. What is accounting fraud?

    Accounting fraud is intentional manipulation of financial statements to create a facade of a company's financial health. ... Read Full Answer >>
  5. Does identity theft or credit card fraud also occur with cash-on-delivery?

    While cash on delivery (COD) is a system intended to typically reduce risk and fraud, as with any type of financial transaction ... Read Full Answer >>
  6. What methods are used to launder money?

    Money laundering involves three basic steps to disguise the source of illegally earned money and make it usable: placement, ... Read Full Answer >>
Related Articles
  1. Insurance

    Credit Scams To Watch Out For

    More than 30 million people were victims of fraud in 2007. Will you be next?
  2. Active Trading

    What Is A Pyramid Scheme?

    The FTC announced it had opened an official investigation of Herbalife, which has been accused of running a pyramid scheme. But what exactly does that mean?
  3. Retirement

    The Ghouls And Monsters On Wall Street

    Learn about some of the creepiest cases of fraud and the characters behind them.
  4. Personal Finance

    4 Dishonest Broker Tactics And How To Avoid Them

    Protecting yourself from unscrupulous practices means knowing how to spot them.
  5. Entrepreneurship

    Stop Scams In Their Tracks

    Find out how to protect yourself and your loved ones from financial fraudsters.
  6. Insurance

    Homeowners Insurance Losers: States That Pay Most

    Which states charge you the most for homeowner's insurance? Hint: They're regularly featured on the Weather Channel.
  7. Investing

    What's an Agency Problem?

    An agency problem occurs when a conflict of interest arises for an agent -- a person acting on behalf of another person. The conflict of interest arises when the agent’s own interests are different ...
  8. Investing Basics

    The Dodd-Frank Wall Street Reform Act

    The Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly called Dodd-Frank, was passed in 2010. The goal of the act is to prevent another great recession like that of 2008, which ...
  9. Stock Analysis

    A New Economic Threat: State-Sponsored Hacking

    State sponsored hacking attempts are becoming a major cause of concern to the US. Here is a list of US sectors most vulnerable to state-sponsored hacking.
  10. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.

You May Also Like

Hot Definitions
  1. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  2. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  3. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  4. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  5. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  6. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
Trading Center