Roomster to pay $1.6M in fines for ‘defrauding renters’: Letitia James

An online apartment-finding platform is to pay $1.6 million in restitution, after a lawsuit alleged that the company conducted deceptive practices that defrauded millions of renters.

New York Attorney General Letitia James and the Federal Trade Commission said on Monday that Manhattan-based Roomster and its owners, John Shriber and Roman Zaks, posted unverified apartment listings and fake reviews in this scheme.

The firm had failed to verify apartments submitted to its website, officials said. It had also posted non-existent apartment listings as well as fake positive reviews that it bought and posted online.

The company and its owners were ordered to stop buying and posting fake reviews.

James and the FTC worked with attorneys general from California, Colorado, Florida, Illinois, and Maryland, in filing an August 2022 lawsuit against the company.

“Amid a housing crisis, Roomster deceived and misled hundreds of students, young adults, and low-income renters for its own benefit,” James said in a news release.

“Today’s consent order blocks Roomster from posting any more fake reviews on unverified listings and prevents the company from harming renters trying to find a home in New York,” she added. “Looking for an apartment can be stressful, and the last thing renters need is to be scammed by fake reviews and apartments that might not even exist.”

Officials said that undercover investigators had no trouble posting a listing with fake rental speculation, using a U.S. Postal Office commercial facility address on the platform. The listing remained on the platform for several months. Roomster never contacted the investigators to verify the address, the apartment specs, the legitimacy of the email, or other personal information of the lister.

Roomster’s owners posted tens of thousands of fake four- and five-star reviews, officials said. The owners also bought more than 20,000 fake reviews from another company to increase traffic to their platform. That company used more than 2,500 fake iTunes accounts, as well as fake Gmail accounts, to push out fake reviews on Roomster’s apps.

.Some examples of the fake top reviews that Roomster bought and published include:

“Roomster is great! …. Especially for low-income people who need rented accom[m]odation or those students who need to rent a room because [i]t provides the service with a reasonable price range period.”

There were so many positive fake reviews, overshadowing one-star reviews from real users, such as:

“Full of scammers … I highly highly suggest that you do not use this site! Because you will get scammed. This app is loaded with people trying to scam you! Out of every 10 post 8 [sic] are scammers DO NOT USE THIS APP!!”

Monday’s consent order includes a monetary judgment of $36.2 million and civil penalties totaling $10.9 million payable to the states. These amounts will be suspended after Roomster and its owners pay $1.6 million to the six states based upon the defendants’ inability to pay the full amount. If Roomster and its owners are found to have misrepresented their financial status or to have violated the terms of the order, the full amounts would immediately become due, officials said.

The order also requires Roomster to ensure that its listings are verified and authentic and to monitor its affiliate marketers. This includes routinely reviewing their marketing materials without notice, investigating consumer complaints about affiliates, providing refunds to consumers who were impacted by affiliate conduct that violated the order, and halting payments and terminating affiliates who pose as consumers or misrepresent their status in other ways.

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