Common Types of Contractor Fraud in Texas

When hiring a contractor in Texas, trust is an essential part of the process. Unfortunately, some contractors use deceptive tactics, leave behind shoddy work, or fail to complete projects. Recognizing common types of contractor fraud can help you protect your rights and may even prevent more serious construction disputes down the line.

1. Misrepresentation of Qualifications or Licensing

In some cases, a contractor may falsely claim to be licensed, certified, or insured in Texas. They might present counterfeit documents or fabricate credentials, or they might exaggerate past experience or work on high-profile projects.

Red flags include:

• Unwillingness to provide verifiable license numbers
• No proof of insurance, or only liability insurance that doesn’t cover your project
• Vague or inflated claims about past experience

2. Upfront Payment Schemes

Some contractors demand large upfront payments before work starts, then either disappear or come back weeks later with excuses and unfinished work. Without proper safeguards, homeowners risk losing substantial cash without any assurance that their project will be completed.

Typical signs of such schemes include requesting a large percentage of the total project cost before work even begins. Alternatively, they may pressure you to pay in cash to “save time” or “avoid fees.” These schemes are most common where there is no written contract, project schedule, or payment milestones.

3. Bait-and-Switch Tactics

Bait-and-switch fraud occurs when a contractor lures you in with a low bid, only to reveal inflated charges or change the scope once work is underway. After securing your agreement, they may claim that the original cost didn’t include essential work, often citing “unforeseen issues” to pad the price.

The biggest warning sign of this fraud is a dramatic price increase during or after the initial phase of construction. You should also watch out for vague language in the contract about “additional costs” or insistence on swift changes without new estimates.

4. Using Substandard Materials

A common contractor scam involves substituting low-quality materials while charging premium prices. To maximize profit, some contractors purchase cheaper products or use leftover scraps without disclosing the change. Low-grade materials compromise structural integrity and can lead to future failures, leaks, or degradation.

Common signs that a contractor may be subjecting you to this behavior include a refusal to (1) show invoices or receipts for purchased materials and/or (2) rapid wear or defects shortly after project completion.

5. Unnecessary Repairs or Project Padding

Some contractors intentionally exaggerate issues or suggest unnecessary work to inflate project costs. After completing genuine repairs, they may tack on redundant services or, in worst cases, cause intentional damage to justify additional charges. This tactic often goes unnoticed until costs spiral.

Warning signs include:

• Contractors diagnosing problems with no visible evidence
• Disproportionately high estimates for minor issues
• Denial or defensiveness when asked to explain the scope or necessity

How to Protect Yourself from Contractor Fraud in Texas

The best way to avoid contractor fraud in Texas is to be proactive. Here are several best practices to protect your rights and property:

• Verify licenses and insurance with the Texas Department of Licensing and Regulation.
• Insist on a detailed, written contract outlining scope, materials, costs, payment schedule, timeline, and warranty.
• Pay in installments tied to completed project stages and avoid paying in full in cash.
• Get multiple bids and compare proposals for clarity, consistency, and fair pricing.
• Request references and check past clients, completed jobs, and public reviews.

If a contractor violates the terms of a contract, it could escalate into a real estate litigation matter, especially if your property value is affected. You should also document everything, including communications, invoices, photos, and receipts.

A Houston Real Estate Attorney Can Help Hold a Contractor Liable for Fraud

If you’ve fallen victim to contractor fraud, a skilled attorney can help you recover your losses and hold the contractor accountable for their misconduct. At Porter Law Firm, we can assist by reviewing contracts and project records to determine if fraud has occurred.

We can also handle all communications with contractors and their insurers as we seek compensation for payments made, repair costs, and other damages. We can also represent your interests in court or alternative dispute forums to secure full compensation.

Contact Porter Law Firm today for a confidential consultation. We’ll review your situation, outline your options, and help you pursue justice.