The Federal Trade Commission (FTC), along with six states, filed a lawsuit against John Shriber and Roman Zaks, owners of the room renting and roommate finder platform Roomster, for allegedly defrauding consumers, accusing them of paying people for fake reviews and listings on their site. The agency says that the “deceptive tactics” violated the FTC Act and state laws.
In a complaint filed by the FTC and the attorneys general of New York, California, Colorado, Florida, Illinois, and Massachusetts, the group alleges that Roomster released “tens of thousands of fake positive reviews to bolster their false claims that properties listed on their Roomster platform are real, available, and verified.” They also allege that Roomster would post fake listings on Craigslist to drive traffic to its platform, and charge anyone who inquired a fee for information on the listings that didn’t exist.
The FTC alleges that their accomplice in this scheme was Jonathan Martinez, who runs a site called AppWinn. The FTC accuses Roomster of asking Martinez for lots of five-star reviews, which he allegedly provided, using more than 2,500 iTunes accounts. Among the emails from Roomster to Martinez mentioned in the complaint, the FTC points out one asking him to “make sure it’s always a random number of reviews, so it looks more natural,” which was apparently sent after Roomster was notified of an FTC investigation.
Martinez signed a proposed settlement with the FTC saying that, in addition to his cooperation with the prosecutors, he would pay a $100,000 fine that would go to the six states, ban him from selling reviews and endorsements, notify both the Apple App Store and Google Play Store that Roomster paid him to post these reviews, and identify the “fake reviews and the approximate times they were posted.”
“Although the Roomster Defendants claim that their Roomster platform provides ‘verified’ and ‘authentic’ living arrangement listings, in many instances it does not,” the FTC and AGs write. “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 that exist.”
In addition to the false reviews, the complaint stated that Roomster would label “verified listings” on its site. In one instance, the FTC discovered in its investigation that “the company immediately accepted and published a fake listing for a fictional apartment at the same address as a U.S. Post Office commercial facility.”
The FTC looking into Roomster as a part of a crackdown on online platforms for misleading consumers on the Internet. In January, the FTC fined online clothing retailer Fashion Nova $4.2 million for allegedly misrepresenting customers through reviews and endorsements. After enforcing the fine, Fashion Nova didn’t confirm or deny the accusations.