Contractor Fraud

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.

BREAKING DOWN '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 Articles
  1. 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?
  2. Insurance

    Credit Scams To Watch Out For

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

    Why Enron Collapsed

    Enron’s collapse is a classic example of greed gone wrong.
  7. Home & Auto

    6 Reasons To Avoid Private Mortgage Insurance

    Homebuyers who put less than 20% down will likely be forced to secure private mortgage insurance. Here are six reasons to avoid it.
  8. Insurance

    How Much Homeowners Insurance Should You Carry?

    This breakdown of coverage into its component parts will provide the answer.
  9. Insurance

    Is Renter’s Insurance Worth It?

    Renter’s insurance is so relatively inexpensive that there’s really no reason not to have it. Still, how much does it cost and what does it cover?
  10. Insurance

    The Average Cost of Homeowners Insurance

    What factors into the the premiums you pay for homeowners insurance? Much depends on where you live. But there are ways to lower your rates.
RELATED FAQS
  1. Does homeowners insurance cover vandalism?

    Vandalism is covered under an all-perils home insurance policy unless it is specifically excluded. Vandalism coverage applies ... Read Full Answer >>
  2. Does homeowners insurance cover tree damage?

    An all-perils homeowners insurance policy covers damage from trees in the event that it happens suddenly and by accident. ... Read Full Answer >>
  3. Does homeowners insurance cover roof replacement?

    A typical all-perils homeowners insurance policy covers the replacement of a roof, regardless of age, only if it is the result ... Read Full Answer >>
  4. Does homeowners insurance cover fires?

    House fires are one of the most common causes of damage to homes, and almost every homeowners insurance policy covers against ... Read Full Answer >>
  5. Does homeowners insurance cover broken pipes?

    An all-perils homeowners insurance policy does not usually provide coverage for an actual broken pipe. However, the water ... Read Full Answer >>
  6. Does homeowners insurance cover roof leaks?

    Roof leaks are covered under all perils homeowners insurance policies if the leak was caused by an act of nature. Acts of ... Read Full Answer >>
Hot Definitions
  1. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  2. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  3. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  4. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  5. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
Trading Center