According to the National Insurance Crime Bureau (NICB), contractor fraud causes billions of dollars in losses each year. Almost $10 billion in losses is linked to “post-disaster fraud,” including roofing scams. The Insurance Information Institute also states that contractor fraud can delay important repairs, making it challenging for average families to recover after extreme weather events. Residents of North Carolina, South Carolina, and Tennessee are certainly no strangers to destructive weather, making contractor fraud a relatively serious problem in these areas. The first step to preventing contractor fraud is learning how to identify it. Once residents know how to spot this misconduct, they may find it easier to avoid falling victim to various schemes. However, effective action is still possible for those who have already suffered losses due to contractor fraud. An experienced business litigation lawyer in North Carolina, Tennessee, or South Carolina may be able to help victims take legal action. King Law Offices serves North Carolina residents in numerous counties. We also serve South Carolina residents in York County and Tennessee residents in Washington County, so contact us at (888) 748-KING to continue the conversation about contractor fraud.
What Is Contractor Fraud?
Contractor fraud occurs when businesses (usually construction companies) commit certain crimes when providing services to customers. These crimes often affect average homeowners, but they can also cause considerable losses for other businesses, insurers, and taxpayers. Contractor fraud comes in many forms, but the goal of this misconduct is to profit as much as possible from a project involving home improvement or rebuilding. The illegal contractor walks away with a considerable sum, while the victim is often left with shoddy renovations, unresolved damage, or extremely high bills. Homeowners frequently need to pay a different, more reliable contractor to complete or redo the initial work. This may double the cost of a renovation project, and these losses can be particularly challenging after a destructive weather event like a hurricane.
What Are the Signs of Contractor Fraud?
Homeowners should watch out for signs of contractor fraud, especially after a destructive weather event. Once homeowners become aware of these signs, they can avoid hiring a fraudulent contractor in the first place.
Unsolicited Visits
Perhaps the most obvious sign of fraud is an unsolicited visit to a damaged home. Fraudulent contractors are well aware of how desperate homeowners can be after disasters, and they are willing to take advantage of this desperation. This is why they target the most heavily damaged neighborhoods after major storms. Most legitimate contractors will not go door to door, offering their services in this manner. Sometimes, these scammers will even claim to be part of government organizations or federal disaster response teams.
When making these unsolicited visits, fraudsters might also pressure homeowners to sign contracts right away. They may promise to repair issues within days if homeowners quickly agree to sign on the dotted line and hand over considerable cash deposits. Residents should remember that they always have time to assess their options before hiring a contractor. Instead of agreeing to anything on the spot, take a moment to research the credentials of the contractor in question. Residents might also want to consider other construction companies in the neighborhood that can provide the same services.
Demands for Cash Deposits
Contractor fraud is often associated with demands for cash deposits. While deposits are common for contract work, there is no need to hand over the entire payment until the work is finished. Even the highest cash deposits should not exceed 50% for most construction projects.
Contractors might also ask homeowners to hand over this cash with no real terms or agreements, leaving them with few legal options if anything goes wrong. Once again, residents should remember that they have time to consider their options in a scenario like this. Avoid caving in to pressure to hand over deposits, especially if a contractor makes an unsolicited visit. Homeowners should also know that a contractor who only accepts cash is probably more likely to be involved in fraud. This is because cash does not leave a “paper trail,” making it easier to get away with crimes.
Estimates That Seem Too Good to Be True
Homeowners often agree to work with fraudulent contractors after hearing estimates that seem incredibly attractive. In this situation, a resident might have already obtained much higher estimates from other contractors. A “low-ball” estimate from a fraudulent contractor might seem like a welcome source of financial relief after a difficult disaster. As attractive as these estimates might seem, they often represent signs of contractor fraud. A lower-than-normal estimate might convince a homeowner to hand over cash before the actual fraud takes place, allowing a fraudster to get their “foot in the door.”
Examples of Contractor Fraud
There are numerous examples of contractor fraud to consider. A contractor might vanish after receiving a cash deposit. A contractor might also inflate their estimate mid-project while making excuses about unforeseen issues. Another example of contractor fraud is simply shoddy repairs that fail to achieve anything. Many other contractors fail to obtain the necessary permits, leading to considerable issues if workplace accidents occur. In some cases, homeowners might even face lawsuits due to these accidents.
Discuss Contractor Fraud With King Law Offices
Although contractor fraud can be incredibly demoralizing for homeowners, various steps could help address this issue. An experienced contractor fraud lawyer in South Carolina, North Carolina, or Tennessee may be able to help homeowners review their legal options as they recover from this misconduct. Federal and state agencies take contractor fraud very seriously, and a lawyer may help report these incidents to the necessary authorities. From there, a lawyer could also assist with holding the contractor accountable in court. Consider working alongside a law firm that has experience in both business and civil litigation, such as King Law Offices. Each case of contractor fraud is slightly different, so in-person discussions with legal professionals may be more instructive than basic online research. North Carolina residents may want to consult King Law Offices for further guidance. We also serve residents of Rock Hill, South Carolina, and Johnson City, Tennessee, so consider contacting us at (888) 748-KING for a continued conversation about contractor fraud.