MAY 5, 2020
Your license and insurance are your verification of your abilities, and they are your safety net if something goes wrong on a job. What happens when someone else uses your license? A friend who is a contractor was at a job when he got an email about a passed inspection. That’s great news, except the contractor bid on this particular job several months ago and did not perform the work. The general contractor told him he was too expensive. The contractor immediately called the town to notify them and to find out if he was listed on the permit. He then called the general contractor. The general contractor said it was all a misunderstanding, but the subcontractor knew better. The general contractor rubbed him the wrong way on past projects. His instincts now told him the general contractor was lying, had someone else perform the work for less money, and used his license and insurance.
After the phone calls, the contractor wondered what comes next and what he should do to protect himself from future fraud. His experience hopefully gives you some insight into how to protect your company.
Licenses are issued and monitored in a variety of ways depending on your state and municipality. Some municipalities require you to issue a letter of intent that may need to be notarized for each project. This extra step offers protection ensuring no one else can use your license. A few states have online databases of projects so you can periodically check where your license was pulled. Upon completion of a project or passing an inspection, most towns email or call the installer to let them know if they passed or failed. A strange call or information that does not seem to match up should be investigated. Other towns offer no information or follow up, which makes your job harder.
If you find out your license was used, notify the town or village immediately. In the case of our contractor, the town removed his name from the permit and contacted the general contractor to determine what happened.
Anyone using someone else’s license fraudulently can be fined with jail time. In California, for instance, the amount is $10,000 and one year in jail. Also of note is this includes if you allow someone to use your license, which many contractors do. There is no loophole around this—you cannot let someone else use your license for work you are not doing. This violation can be a misdemeanor or felony based on the facts, intent of the fraud and resulting duress.
If you do not know the contractor, head to Google and search for more information about the person using your license and if legal action has been taken in the past. Read any reviews of the company because that will give you some indication of the type of person you are dealing with. Your attorney general’s office will have a record of previous complaints or lawsuits and will want to hear from you if a case is being built.
Contact a lawyer to help you through some of the other steps. A cease and desist order should be issued to the contractor using your license. A lawyer can also help with a police report for a criminal case if applicable and fraud can be proven. Also contact the Department of Business and Professional Regulation to file a complaint.
Unfortunately in most cases, contractors don’t know that someone used their license and insurance until it is too late. Some may never find out if the contractor knows how to work the system. Take a few steps to better monitor your license and the use of its number. When fraud does happen, act immediately so your company and its reputation are not jeopardized.