Millions of Californians have been looking for apartments and homes to rent in what's become an increasingly tight rental market.
But the NBC4 I-Team caught on hidden camera what authorities say may be a scam that preys on unwitting home hunters. The alleged scam involves businesses which promise to find renters a place to live but take their money and then don't deliver.
"They left me homeless, because they promised to give me a home that I can afford, and I have not gotten anything from them," said Marissa Merino, who paid $170 to Star Rentals, a major Rental Listing Agency for the LA area.
Most consumers looking for an apartment or home to rent start by looking at ads, either online or in the papers. But calls to many of those ads lead to one of 40 rental listing agencies licensed by the California Department of Real Estate.
Downey-based Star Rentals, among the agencies licensed by the state, is graded "F" by the Better Business Bureau. The bureau's website contains a blanket warning about all rental listing services, calling the field "a high-complaint industry."
After receiving numerous complaints, NBC4 sent two members of the I-Team undercover to Star Rentals. The reporters posed as prospective tenants, looking for a two bedroom apartment for a maximum of $1,300 a month.
A Star Rentals employee who identified herself as Andrea agreed to provide listings that fit their criteria, if they paid a $150 cash fee up front. The reporters paid the fee. And then, in a conversation captured on hidden camera, Andrea tells them she found eight listings that meet their criteria:
I-Team: They're all in our price range?
STAR RENTALS: Yeah.
I-Team: All of these listings are available right now?
STAR RENTALS: Yeah.
But of the eight listings Star Rentals provided, the I-Team found that five were not available for rent, and the other three listings were higher than the maximum stipulated rent.
For example, the landlord of a North Hollywood home included in the list provided by Star told the I-Team the house rents for $2,500 a month, not the $1,100 a month Star indicated.
When the I-Team's "renters" tried calling Andrea at Star Rentals to complain, they were usually told she was unavailable or with clients. Sometimes, the person answering the phone at Star Rentals simply hung up.
Dozens of angry Star Rentals customers told the I-Team the same thing happened to them. Marissa Merino said she's been calling Star since April to complain that they gave her no rental listings that fit her criteria.
"They will not pick up my calls, they will tell me nobody's available," Merino said.
Authorities say Star isn't the only rental listing agency operating this way.
Earlier this year, the California Department of Real Estate shut down Global Rentals, housed in an El Monte strip mall. The I-Team found another agency, International Home Rentals, now operating in the same location.
"We do see a regular pattern with these services," said Phil Ihde, an enforcement agent with the Department of Real Estate.
Rental listing agencies are frequently "offering properties that aren't available or misrepresenting the amount of rent on the property," Ihde said.
The Star Rentals contract signed by the I-Team reporters says if the company doesn't find a client at least three available rentals within five days, the client gets a refund. But when the undercover renters tried to get their money back, a Star Rentals manager replied, "It won't be today."
"They should've offered you a refund," Ihde said.
After reviewing the I-Team's undercover video of Star Rentals, Ihde said, "It's misrepresentation, it's fraud, it's dishonest."
At the end of its investigation, The I-Team returned to Star Rentals with cameras in full view to get some answers, and brought along a dozen angry customers. Star's managers slipped into a back room, and called the cops on NBC4 and the customers.
"Everybody out right now," said a Downey police officer called to the scene.
Star did talk off-camera to the customers who accompanied the I-Team. While insisting that they gave some of them available rental listings, the company did offer most of them refunds, including the undercover I-Team renters.
A Star manager named Johnathan later told NBC4 by phone that the company tries to provide honest service to its customers.
As for International Home Rentals, hours before our I-Team investigation went public, the Department of Real Estate issued the company an "Order To Desist and Refrain" from doing business as a rental listing agency.
The state's order alleges that International Rentals was both failing to provide clients with available rental listings, and then failing to give them refunds. The owner of International, Jason Rodriguez, denied the allegations when contacted by the I-Team, but says he has stopped signing up new customers until he can have a hearing with the state.
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