Roomster Pocketed $27M Through Fake Reviews, Phony Listings, FTC Claims
WASHINGTON — The Federal Trade Commission is suing the online roommate and housing application Roomster for allegedly profiting to the tune of $27 million from fake reviews and fraudulent listings, it announced Tuesday.
“Roomster polluted the online marketplace with fake reviews and phony listings, making it even harder for people to find affordable rental housing,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a statement. “Along with our state partners, we aim to hold Roomster and its top executives accountable and return money to hardworking renters.”
The commission joins six states — California, Colorado, Florida, Illinois, Massachusetts and New York — in its lawsuit against Roomster and its owners John Shriber and Roman Zaks. The commission is also separately suing Jonathan Martinez, who allegedly sold fake reviews to the company.
The bipartisan commission voted unanimously to file the lawsuit in the U.S. District Court for the Southern District of New York.
The New York-based rental application allows people to access listings for apartment rentals, sublets and roommate requests for a fee. The commission alleges in its lawsuit that while the application promised verification of these properties, there was none.
“Although the Roomster defendants claim that their Roomster platform provides ‘verified’ and ‘authentic’ living arrangement listings, in many instances it does not. Instead, the Roomster defendants rely on fake reviews (thousands of which were purchased from defendant Martinez alone) and fake listings to get consumers to pay for access to rental information that is unverified and, in many instances, does not exist,” according to the lawsuit.
The lawsuit also alleges the company’s founders paid Martinez to flood both the Apple App Store and the Google Play store with thousands of fake reviews, upping the profile of the company to lure in more users to its application, which is the main platform for the company.
“Defendant Shriber instructed defendant Martinez to produce ‘lots of 5 star IOS app reviews’ and stated that he ‘would like to be #1’ for people searching for roommates,” according to the lawsuit.
The commission is asking the court to require the company to notify the app stores of those false reviews and identify each one and require the company to stop paying for false reviews.
The commission has also filed a proposed order against Martinez requiring him to pay a $100,000 fine and cooperate in the FTC’s case against Roomster.
“There is a term for lying and deceiving your customers to grow your business: Fraud. Roomster used illegal and unacceptable practices to grow its business at the expense of low-income renters and students,” said New York Attorney General Letitia James in a statement. “Unlike Roomster’s unverified listings and fake reviews, their deceptive business practices will not go unchecked. I am proud to lead this effort with the FTC to protect low-income renters and students defrauded by Roomster.”
This lawsuit comes as the commission is cracking down on false or misleading online reviews.
In 2021, the commission sent notices to hundreds of companies that would trigger financial penalties if companies did not stop deceiving customers through online reviews. And in March the commission settled a $4.2 million agreement with online clothing company Fashion Nova because it allegedly hid bad reviews.
Madeline can be reached at [email protected] and @MadelineHughes
