Hopeful apartment renters unknowingly sign up for monthly charges

Another Headache

Anyone who’s ever searched for housing – pretty much anyone reading these words – knows the trials and tribulations of the process. The perfect apartment that gets snatched away. The affordable flat that winds up packed with hidden fees. The endless parade of brokers, landlords, potential roommates … It’s exhausting.

And for a number of hopeful renters across the country, this tedious process became even more difficult. According to a complaint filed by the Federal Trade Commission (FTC or Commission) in January 2017, Credit Bureau Center, LLC, a Delaware-based corporation, and three individuals related to the company had engaged for three years in an underhanded scheme to enroll prospective renters in a monthly credit fee service, allegedly without their knowledge.

Step This Way, Please …

The alleged scheme was simple. Two of the named defendants created Craigslist ads offering apartments for rent. When targets replied to the ad, a landlord would reply, letting the target know that the renter that had previously been promised the apartment had given it up, thus opening a great opportunity to snag the apartment immediately. And these were impressive apartments: freshly renovated, with new appliances, and utilities and parking garage fees priced into the advertised monthly rent.

There was, of course, just one thing the target needed to do before touring the property: provide a credit score. The target was instructed to visit a website where he or she would be walked through a credit report application; a handy link was included in the email. The prospective new renter would click through to the credit reporting site and provide the relevant personal and financial information.

There was one problem – the landlords didn’t exist. Neither did the properties. Both, claimed the Commission, were chimeras created by the defendants to lead unsuspecting targets to the credit scoring website. And once the targets’ information was logged, the site began charging them $29.94 a month for their “service.” But the tour of the property itself never materialized.

The Takeaway

This alleged scam generated quite a response – more than 500 consumer complaints and millions of dollars of consumer loss, according to the complaint. Once the FTC turned its attention to the scam, the Commission launched its complaint, pursuing various combined violations of the FTC Act, the Restore Online Shoppers’ Confidence Act, the Fair Credit Reporting Act and the Free Reports Rule.

recent court order issued by the Northern District of Illinois, Eastern Division, resolved the case in part. Two of the individual defendants, affiliate marketers who organized the fake Craigslist ads and landlord emails, are prohibited by the order from misrepresenting products and services, and are bound by certain guidelines when engaging in marketing projects. They were also prohibited by the order from profiting off of their targets’ personal information. The $6.8 million judgment will be suspended in part once certain payments are made by the defendants.

The case against Credit Bureau Center – the company that ran the credit report websites – and the remaining individual is still ongoing.