Posted in Uncategorized
By Tony Liu, Founder and Principal Business Trial Attorney
In Summary:
If a construction contractor in California has defrauded your business, whether through unfinished work, false invoicing, or substandard performance, you may have legal options to recover your losses. This guide walks you through the warning signs of contractor fraud, legal steps you can take under California law, and how to protect your business from future risk. Learn how experienced business counsel can help you outmaneuver bad actors before they damage your business further.
What is Construction Contractor Fraud in California?
Construction contractor fraud occurs when a contractor uses deception or misrepresentation to extract money or benefits from your business. This might include:
- Taking payment and abandoning the project
- Substituting cheap materials for promised high-quality ones
- Inflating costs or billing for work not performed
- Violating the terms of your agreement
Under California law, these actions can constitute civil fraud, breach of contract, or even criminal behavior.
Related Statute: California Business & Professions Code § 7159 provides specific protections for commercial and residential construction contracts.
Red Flags That a Contractor Might Be Cheating Your Business
Warning Signs You Shouldn’t Ignore
- They refuse to provide a written contract
- The scope of work keeps changing without documentation
- Payments are demanded upfront and in cash
- Project progress is consistently delayed
- Communication becomes evasive or hostile
These early warning signs can help you act before the damage is irreversible.
How to Legally Respond to Contractor Fraud in California
Step 1 – Gather All Documentation
You’ll need to compile:
- The signed contract or agreement
- All invoices, receipts, and payment proof
- Photos or videos of the unfinished or defective work
- Any text messages, emails, or call logs
Step 2 – Notify the Contractor in Writing
Send a formal demand letter describing the breaches and requesting a resolution by a certain date. This can serve as evidence later if legal action becomes necessary.
Step 3 – File a Complaint with the CSLB
The California Contractors State License Board (CSLB) investigates consumer complaints and may offer arbitration or disciplinary action.
File online: CSLB Complaint Form
Step 4 – Consult a Business Litigation Attorney
If your business suffered financially or reputationally, an experienced business attorney can:
- Determine if the contractor committed civil fraud
- File a lawsuit for breach of contract, negligence, or unjust enrichment
- Help recover damages or stop ongoing losses
Can You Sue a Construction Contractor for Fraud in California?
Yes. If you can prove the contractor intentionally deceived you and caused financial harm, you may sue for:
- Compensatory damages (costs of repair or replacement)
- Punitive damages (in cases of intentional wrongdoing)
- Legal fees and court costs (in some circumstances)
Learn more about contractor fraud, misrepresentation, and remedies in California.
Proactive Steps to Protect Your Business in Future Construction Projects
- Always use a written contract that clearly defines scope, timeline, and payment structure
- Verify licenses and insurance at www.cslb.ca.gov
- Use milestone payments tied to completed work
- Perform site inspections before releasing funds
- Document everything—communications, payments, and changes to the plan
Prevention is cheaper than litigation. An experienced attorney can help review your construction contract before you sign.
FAQ – Common Questions About Construction Contractor Fraud in California
1. What are my rights if a contractor takes my money and disappears?
You may have grounds for a civil lawsuit and a complaint to the CSLB. A fraud claim may entitle you to compensation beyond the cost of the work.
2. Can I stop payment or cancel the contract if I suspect fraud?
Yes, if the contractor breaches material terms. But do so carefully—with legal advice—to avoid claims of breach yourself.
3. Is bad workmanship considered fraud?
Not always. Poor workmanship may be negligence or breach of contract, but if it was intentionally misrepresented, it could be fraud.
4. Can a business sue for emotional distress caused by a fraudulent contractor?
Typically no—businesses can’t claim emotional distress. But reputational harm and lost profits can be recoverable damages.
5. Should I hire a lawyer before contacting the CSLB?
It’s smart to consult an attorney first. The CSLB process can take time and may not fully compensate you. Legal action can provide stronger remedies.
Don’t Let Contractor Fraud Derail Your Business
When a contractor cheats you, the damage goes beyond just the construction site. It can disrupt your operations, cash flow, reputation, and even your peace of mind. But you’re not powerless—and you’re not alone.
At Focus Law, we’ve helped California business owners like you recover from fraudulent contractors, enforce their rights, and avoid future traps. Let us give you the clarity and protection you deserve.
Schedule a consultation today and take the first step toward reclaiming control.
Last Updated: August 2025
