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My customer was scammed into sending a payment to a fraudulent bank account. Does he still have to pay me?

I'm a construction contractor and I have a customer that owed me $49,000 for work performed on a project. My customer received an email from a scammer pretending to be a representative of my company and asked the customer to ACH the payment to a fraudulent bank account. My customer ACH'd the payment to the fraudster. Does the customer still have to pay me? A few more related bullet points: • A conditional waiver was signed by one of my employees related to the payment • We never received the payment • My AR employee didn't follow up on payment status until 4 months later. That's when the fraud was discovered.

1 reply

Jun 16, 2020

Your customer falling victim to a scammer shouldn't have any impact on your right to payment. It's extremely unfortunate when something like that happens. But, if your company performed the work and didn't get paid for it - payment is still owed, regardless of whether the customer has paid someone else pretending to be you. As you likely know, conditional waivers only become effective upon the receipt of payment. So, if payment wasn't made, then the waiver hasn't waived any rights. More on Texas waivers here: Texas Waiver Forms & Guide – All You Need to Know.

Federal projects and deadlines

Keep in mind that mechanics lien rights typically won't be available on a federal project. Instead, a payment bond claim under the Miller Act would be the more appropriate claim. But, those claims have strict (and relatively short) deadline for some subs and suppliers. Below is a quick discussion, but these resources will be useful: (1) Federal Miller Act Guide Forms & FAQs; and (2) The Miller Act Claims: What You Need to Know to Make a Claim.

Hired by the GC

If you were hired directly by the project's GC, then you won't have to worry about making a formal bond claim with the surety. Instead, first-tier subcontractors can proceed with a lawsuit against the bond. The option to file a lawsuit against the bond will be available for up to 1 year after your last furnishing of labor or materials to the project.

Hired by someone else

If you were hired by someone other than the GC (like by another subcontractor), then a payment bond claim must be sent to the surety before a lawsuit can be filed. That bond claim must be made within 90 days of last furnishing labor or materials to the job.

Other claims still on the table

Bond claims and suits against the bond are hardly the only recovery options out there. Other legal claims like breach of contract, a claim under the federal prompt payment laws, etc. will be on the table. Simply threatening to bring those claims via payment demand letter could be enough to get paid. But, proceeding with filing a lawsuit may become necessary in some situations. For help navigating your options, it'd be useful to consult with a local Texas construction attorney who's got experience with federal projects. For help finding the right attorney, this directory will be useful: Find a Texas Construction Lawyer.

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