Council member Willie J Hardy (D-Ward 7) held up a copy of last week's newspaper and glared across the City Council chamber at Tim Southerland owner of Empire Rentals, a housing referral company.

"I live on Benning Road and I don't know of any two-bedroom apartments there that rent for $175 a month," Hardy said of an Empire Rentals ad in The Washington Post. Empire Rentals charges apartment seekers $45 for listings of available housing.

Southerland, who said he would "welcome" city regulation of housing referral firms -- subject of the council committee hearing last week -- denied that ads placed by his company are misleading. He volunteered to give Hardy the addresses and telephone numbers of the apartments advertised that day. He declined to give the same information to a reporter.

Hardy, however, passed along Southerland's information to a reporter, who telephoned the advertised apartments. Two of the four were as advertised, one omitted a key fact, and one resulted in a disagreement over the actual rent.

The apparent omission involved a two-bedroom apartment on Benning Road. It turned out to be in a basement, a fact the ad did not mention. Southerland said later that a prospective tenant would be told it was a basement apartment before going to see it.

The disagreement centered on a five-room unit at 3015 Sherman Ave. NW, advertised for $250 a month. The apartment was initially reported to rent for more than $500 a month by a man who answered the phone and identified himself as the landlord, but declined to give his name.

Questioned about the discrepancy, Southerland said the landlord might have confused the Sherman Avenue apartment with another property he has listed with Empire Rentals that rents for about $500 a month.

The reporter placed another call to the landlord. At first he maintained the $250-a-month figure advertised in the newspaper was not the correct rental. He then asked the reporter to hold the line. After about five minutes, he told the reporter he had just finished talking to Southerland.

The landlord then said the Sherman Avenue apartment rented for $250 and claimed he never said it rented for more than $500.

Asked if it is possible that he confused the apartment with another, the landlord said he had no property that rents for about $500.

Last year, the D.C. Office of Consumer Protection received more than 150 complaints about alleged misleading business practices involving housing referral agencies. The complaints have spurred new efforts to put muscle into the city's Consumer Protection Act. Two bills requiring the referral agencies to give consumers accurate and up-to-date information are expected to come up for a vote before the City Council next month.

Gina G. Bell, 24, of Falls Church, Va., who testified before Hardy's committee last week, said she wished such laws could have been in force when she dealt with a D.C. housing referral agency last March.

A house in Virginia advertised in a newspaper sounded just right, and was still available when she called the Red Giant Rental Service at 1436 Wisconsin Ave. NW. Bell hurried to the Red Giant office and put down her money only to be told the house had just been rented.

When she later checked the telephone number and address of the advertised Virginia home, she discovered such a house does not exist, Bell told the committee. Bell demanded a refund and was assured she would get it. Two months later she got a check for Red Giant.

It bounced.

Mick Thompson, spokesman for Red Giant headquarters in Tampa, Fla., denied his company uses false advertising and said Bell's problems were caused by a manager who was fired.

Last year, the Office of Consumer Protection registered 55 complaints against Red Giant and 50 against Empire Rentals. Officials say Empire Rentals has cooperated in settling half of the complaints and has had no complaints against it since June.

The two bills to regulate the housing referral agencies are:

A bill submitted by Mayor Marion Barry, which would require the companies' contracts to state clearly that the consumer has the right to a full refund and the right to terminate the contract. It also would require companies to list the D.C. Office of Consumer Protection's telephone number on contracts.

A bill, introduced by City Council member David A. Clarke is similar, but goes a step further, adding a requirement that firms register with the Office of Consumer Protection or pay a $250 fine.

Detective Earl Gould of the District police's consumer fraud unit said past investigations show that agencies sometimes advertise nonexistent apartment as a "come on." He offered this acenario: Customers call the telephone number listed by the agencies for these "apartments" and wind up talking to the firm's employes posing as landlords. The "landlords" tell the customer the apartment has already rented

He said some of the listings indeed are submitted by landlords and real estate agents, but many are gleaned from newspaper classified ads, or are fabricated by the agencies.