A rip-off is a cheap imitation of a story or character without the requisite credit given to the original author. Similar to plagiarism, which is lifting somebody's work wholesale and claiming it as one's own.
Many badfics are said to be rip-offs of trite romance novels, canons other than their own, popular songs, and even other fanfics. Further, many "original" characters within badfics are rip-offs of canon characters or other OCs.
Rip-offs are not limited to fanfiction, however. There are many canon works that are considered to be rip-offs of other, superior creations. The Icewind Dale Trilogy, for instance, has many moments in which it rips off The Lord of the Rings, while The Inheritance Cycle is reportedly a rip-off of half the high fantasy books in existence, as well as Star Wars.