FTC wins $6 million judgment from Laguna Niguel operators of online Section 8 rent scam

The Federal Trade Commission has won a $6 million judgment against the operators of a shuttered Southern California rental firm that preyed on low-income tenants seeking hard-to-find, government-subsidized Section 8 housing.

The FTC earlier this month got a summary judgment from U.S. District Court against brothers Steven and Kevin Shayan who operated Apartment Hunters Inc.’s WeTakeSection8.com in Laguna Niguel. The federal court ruling also permanently banned the Shayans from offering rental listing services in the future.

Last year, the agency shut the Shayans’ rental website which claimed “500,000-plus” housing options in its database. Subscribers — primarily “low-income, disabled, and older adults,” according to the agency — paid up to $15 a week for the bogus service.

The FTC said the Shayans’ websites, built by Lithuanians, claimed to have “accurate, up-to-date listings that were approved for Section 8 housing vouchers. In reality, most of the listed properties were either unavailable or did not accept Section 8 housing vouchers.”

The agency noted Apartment Hunters first ran into regulatory trouble when the California Department of Real Estate sanctioned the rental listing service in 2012 for misleading its clients; it then revoked the company’s business license in 2015.

The FTC claims renters were defrauded by the Shayans at other affiliated online rental services, including ApartmentHunterz.com and FeaturedRentals.com.

This is not a unique scheme. A 2018 survey by Apartment List found 43% of renters said they saw listings they suspected were frauds in their housing searches. An estimated 5.2 million renters lost a median $400 to rental scams such as phony listings and outright theft of deposits and rent payments.

Even with the court action, those defrauded by the Shayans made not ever see reparations.

“We make every effort to hold defendants accountable and to enforce FTC orders as well as to return money to defrauded consumers when possible,” said an agency spokesperson. “We are pleased that the court has agreed to shut this scheme down permanently and to hold the Shayan brothers accountable for their unlawful behavior. Unfortunately, with such schemes it is rare that sufficient funds exist to return money to injured consumers.”