WHY IT WORKS
The "concessions" scam was carefully crafted and designed. This has netted millions of dollars for large property management companies that employ these unethical tactics. So far, they have withstood all efforts to stop it.
Here are the pillars on which the scam is built:
- False Advertising (i.e., the bait and switch). The scheme would not be possible without false advertising. If a landlord were forced to advertise an apartment for the amount it plans to put on the lease (e.g., $3,500), it wouldn't rent a single unit.
- Deceptive Leases. Landlords trick new tenants into believing the extremely high "rent" on the lease is "just a formality" or "required by rental housing rules." By law, contracts that are based on the deception of either party are void.
- Poor Government Oversight. Landlords are required to file rent amounts with the city. The city department that collects these filings doesn't check the numbers even if they are wildly implausible. In fact, its policy is not to check the numbers even if a tenant can provide evidence like a bank statement showing that the rent filing is incorrect.
- Misleading Forms. The RAD-8 rent increase form was designed by the city but landlords fill in the numbers. The "rents" reported can be $1,500 more per month or more than the actual amount paid. Tenants assume that because the form looks official the numbers must be sanctioned by the city. In addition, the form wrongly implies that rent increases are mandated, when in fact they are restricted to a maximum amount.
- Tenants are forced to renew leases under duress. Because they have been deceived into signing leases with an extremely high amount listed as the "rent," tenants are at a severe disadvantage in negotiations the following year. Landlords tell them that they can only get a remotely reasonable monthly rent if they sign a new lease listing an even higher "rent" than before.
- There is no practical and effective way to sue. The law stipulates that legal disputes under the Rental Housing Act are to be adjudicated in administrative court, in which tenants appear before a judge without a jury. This is meant to be a simple procedure, but in fact it can drag out for months and can be very costly.
NEXT: How to stop it