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Attorney General James and FTC sue online apartment finder for defrauding renters

New York Attorney General Letitia James and the Federal Trade Commission (FTC) today sued Roomster — an online platform that claims to help individuals find apartments and roommates — and its executives for defrauding millions of users nationwide. The lawsuit alleges that Roomster, a Manhattan-based company, failed to verify apartments submitted to its website, posted non-existent apartment listings, and scammed consumers out of tens of millions of dollars. Roomster, which is used predominantly by low-income renters and students, also bought and uploaded tens of thousands of fake positive reviews on app stores to boost traffic to its platform. Attorney General James and the FTC are co-leading a coalition of six attorneys general to stop Roomster’s deceptive practices and secure restitution for impacted individuals nationwide.

“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 Attorney General James. “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.”

“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, FTC’s Bureau of Consumer Protection. “Along with our state partners, we aim to hold Roomster and its top executives accountable and return money to hardworking renters.”

DiSanto Propane (Billboard)

The investigation leading to the lawsuit uncovered a deceptive scheme by Roomster that predominantly impacted students and low-income renters. As alleged in the complaint filed in the Southern District of New York, Roomster posted fake, unverified listings on various websites that directed consumers to their platform and encouraged them to pay for a monthly subscription to access the listing. It is estimated that Roomster defrauded thousands of low-income renters out of $27 million through fake listings and reviews.

The company claimed to post accurate and verified apartment listings, including rental properties, room rentals, sublets, and roommate requests. However, the investigation found that Roomster did not actually verify listings posted on its platform by users or ensure that they were real or authentic. Undercover investigators were easily able to post a listing with a U.S. Postal Office commercial facility address on the platform. The listing provided by the undercover investigators had fake rental specifications and remained on the platform for several months. At no point did Roomster contact the undercover investigators to verify the address, the specifics of the apartment, or the legitimacy of the email or other personal information of the lister.

To lend credibility to its unverified listings, Roomster’s executives saturated the internet with tens of thousands of fake 4- and 5-star reviews. Roomster’s CEO, John Shriber, and Chief Technology Officer, Roman Zaks, bought more than 20,000 fake reviews from Jonathan Martinez, who does business as AppWinn, to increase traffic to their platform. Mr. Martinez used more than 2,500 fake iTunes accounts, as well as fake Gmail accounts, to push out fake reviews on Roomster’s apps. Before Mr. Martinez became aware of this investigation, his website stated, “Buy app reviews & boost your app ranking.”

The lawsuit alleges that Roomster’s executives were deliberate about how to post the fake reviews to appear real and increase the chances of it being published on app stores. They called this scheme a “drip campaign.” Mr. Martinez told Roomster’s executives that fake reviews had to be “dripped” at a “slower pace” in order to “stick.” Similarly, Mr. Zaks told Mr. Martinez to spread out the reviews to be “constant and random” to increase their chances of getting posted on the app stores. On multiple occasions, Roomster’s executives directed Mr. Martinez to post a random amount of reviews in several countries, specifying in their orders how many reviews should go to each country.


Some examples of the fake 5-star reviews that Roomster bought from Mr. Martinez and published include:

Wonderful!
Roomster is better then [sic] others. Very easy to use. Tons of listing. No scammers, all users are real. Easy to communicate with owners. In a single word FANTASTIC!

like!
I’m a student with a small budget, so I love going through Roomster for sharing my room. It makes finding roommates faster and more efficient. Roomster is a good choice for me!

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.

The sheer volume of positive fake reviews diluted 1-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!!

Scam
This app is garbage. I had higher hopes but it completely let me down. Every profile on here seems to be a fake profile and every message I got from people said almost exactly the same thing. Not worth it.

Don’t waste your time
I couldn’t give it zero. It won’t let me view things so I got a 7 day subscription. Reached out to 38 listers. Got response from only 1 legitimate lister. The rest was all scam and 5 days of headache. Steer clear. They don’t vet

Mr. Martinez was also sued today in the suit against Roomster and its principals. Mr. Martinez has agreed to a Consent Judgment in which he agreed to a permanent injunction and the payment of $100,000 in monetary relief.

Through their lawsuit, Attorney General James, the FTC, and the states are seeking a permanent injunction to stop Roomster’s fraudulent practices, nationwide restitution for those who have been impacted, and civil penalties.

Joining Attorney General James and the FTC in today’s lawsuit are the attorneys general of California, Colorado, Florida, Illinois, and Maryland.

This case is being handled by Assistant Attorney General Melvin Goldberg of the Consumer Frauds Bureau. The Consumer Frauds Bureau is led by Bureau Chief Jane Azia and Deputy Bureau Chief Laura Levine and is a part of the Division for Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.



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