All About the Rental Property Scam That Also Involved Cancellations Based on Racial Prejudice
People searching for the best property at an affordable rent while moving to a new place can end up discovering a surprisingly good deal, but are also vulnerable to dubious schemes. Recently, two people were put on trial by the federal grand jury as the masterminds behind a rental property scam. The scam reportedly raked in more than $8.5 million and was also linked to 10,000 reservations across 10 states, as per the U.S. Department of Justice.
Shray Goel and Shaunik Raheja allegedly ran a double booking, bait-and-switch scam through rental platforms such as Airbnb. They started a short-term rental business which they used to defraud Airbnb, Vrbo, and guests renting the properties through the platforms.
Goel was initially charged on December 13 and Raheja was added to a superseding indictment on Wednesday which also added that the scam was particularly against Black people.
They targeted unsuspecting travelers and robbed them of time and money, leaving them with no choice but to settle for last-minute arrangements. The duo deceived consumers about the location and conditions of properties and canceled reservations to double-book properties based on racial prejudices.
Scam affected people in more than 10 States
Goel and Raheja owned and leased properties in Los Angeles, California, Chicago, Georgia, Florida, Indiana, Tennessee, and Texas. They allegedly double-booked the properties through multiple listings of the same property on Airbnb and then claimed plumbing problems and then used those excuses to cancel overbooked guests or simply force them into moving to inferior replacement accommodations.
They mostly ran a secret bidding war for the properties which means they posted many listings for a single property at various prices for the same night, which allowed the highest bidder to rent the area.
They also allegedly kept all of their new properties in any given area at maximum capacity by using popular listings as bait which resulted in the guests booking those listings.
The indictment further alleges that the perpetrators made decisions about which guests to keep and which to cancel based in part on their racial prejudices and discrimination. They tried to avoid renting to guests they perceived to be Black and “in this way depriv[ed] these guests of their property interest in the reservations and otherwise caus[ed] these guests to suffer monetary losses when their reservations were canceled."
Between 2018 and 2019 the two defendants Goel and Raheja booked more than 10,000 reservations through Airbnb and received more than $7 million in payouts on those reservations.
Could face a maximum prison time of 20 years
According to the U.S. Department of Justice, the conspiracy and wire charges individually carry a statutory maximum penalty of 20 years in federal prison. There is also a two-year mandatory consecutive sentence for aggravated identity theft counts.
Platforms like Airbnb trying to tackle the scam
Last year, Airbnb said that it removed more than 50 thousand fake listings and also prevented 57,000 from joining the platform. The company is also planning to use technologies like AI to verify listings in the five countries US, the UK, Canada, France, and Australia, as of now.
These platforms are currently cooperating with the government to carry out the investigation in the most efficient manner possible. The indictment charges the two men with conspiracy to commit wire fraud and 13 other counts of wire fraud.