This is not true, apps are reviewed now. IMO this is theater and useless, though.
> No inspection of source code for red flags.
This is also untrue, Google scans apps for known malware. Not sure how this was missed, though.
> And the sketchy apps can be rated five stars by a bunch of bots artificially inflating its popularity.
This is true. It's also a problem on the App Store and similar sites.
The App Store is not immune to these issues, either:
https://twitter.com/jonathandata1/status/1486458526767661060
It usually starts with xcode injecting malware, since the building process is so opaque and undocumented, they get away with it.
That happened once, it's not like every few months or year where hear of a new instance of something like that and it's still not reaching outside itself into other apps as far as I know. So yeah, it could steal the banking login info of the banking app it managed to get injected into but it's not like "iFart" can reach in and grab your bank creds.
People have all the time problems publishing for all the stupid reasons.
At the same time people publishing malware or spyware are not cought.
I guess the implicit (and reasonable) assumptions of your question are that the source code is fully reviewed by the people running the app store, and it is a "store" in the sense that people routinely pay money for the apps available there.