Construction Fraud Law & Legal Definition


Construction fraud involves deceit in the performance of construction work, often involving home repairs. Basically, promises are made that are intended to be relied on, and that reliance leads to harm or loss when the promise fails to be fulfilled.

In home repair scams, workers often complete some of the work, but usually supply substandard supplies or efforts. Then, they disappear before the job is completed. Sometimes, they claim unnecessary work is needed or even create the damage themselves. They offer to begin the repair or construction with the supplies they already have for a fairly reasonable price, then ask for an advance on the work they will return to complete, before disappearing.

The following, according to one state's definition, are acts of construction fraud when a person knowingly:

  • Misapplies money
  • Obtains money, property or labor by false pretense
  • Receives payments and fails to state his own true name, or states a false name, contractor’s license number, address or telephone number of the person offering a service;
  • Diverts money or commits any act of theft, forgery, fraud or embezzlement, in connection with a construction project
  • Acts as a contractor without a contractor's license
  • Submits false information concerning a payroll to a public officer or agency in any report relating to a contract for a public work
  • Fails to disclose a material fact.