Daily Real Estate News reports that four New Jersey and New York men were charged with "felony fraud for a scheme that enticed people in search of rentals to pay hundreds in bogus search fees."

Using the name "Innovative Apartments", they claimed to have access to "exclusive apartment listing" and told prospective clients that they would need to to pay $200 for a "credit and background check."

You can probably guess what happened next: $200 paid, and then nothing except for links to apartments listed on numerous other free sites. The New York Attorney General's office accused the foursome of scamming people out $1,000,0000 over the past 3 years.
Ali Rogers, a New York City Realtor and author of the best real estate book I've read in a long time (Diary of a Real Estate Rookie) has some tips for apartment hunters looking to avoid advance fee scams:
  • If a company wants to charge to resell listings in New York State, it has to register with the Department of State as an AIV (Apartment Information Vendor). So the first thing to do is to go to the Department of State website and make sure you're dealing with a legitimate company.
  • The rental market moves so quickly that even legitimate services often end up sending expired listings. Use sites like Craigslist to search for listings on your own.
  • If you want to pay for help finding the best possible apartment, use a real estate agent.
  • A credit check should only cost about $25 and is paid after you find an apartment.

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