Roomster Settles Over Fake Reviews and Listings: $36M Penalty for Deceptive Practices
In a significant move to protect consumers from deceptive business practices, the Federal Trade Commission (“FTC”), along with state partners from New York, California, Colorado, Florida, Illinois, and Massachusetts, has reached a settlement with Roomster Corp. and its owners, John Shriber and Roman Zaks. The settlement, which permanently bans the company from purchasing or incentivizing fake reviews, addresses charges that Roomster misled consumers by using phony reviews and listings to lure renters into paying for non-existent housing opportunities.
Roomster, a popular rental listing platform, was found to have falsely claimed that its listings were “verified” and “authentic” when, in reality, many of these properties were either fabricated or misrepresented. The company reportedly bought tens of thousands of fake, glowing reviews through Jonathan Martinez, operating under the business name AppWinn. These reviews, posted across various online platforms, gave consumers the false impression that Roomster was a reliable service offering genuine housing options. In reality, these listings were often fake, leading frustrated renters to pay for access to information about properties that didn’t exist.
The FTC’s investigation revealed that Roomster and its owners, either directly or through affiliate marketers, further exacerbated the problem by posting fake rental listings on websites like Craigslist. These listings acted as bait, drawing consumers to Roomster’s platform, where they were encouraged to pay fees for access to living arrangement details. Unfortunately, many of these consumers found that the properties they were promised simply didn’t exist.
As part of the settlement, Roomster, Shriber, and Zaks are now permanently prohibited from buying or incentivizing reviews in any form. They are also banned from using or disseminating reviews where there is a relationship with the reviewer that could affect the credibility of the review. This measure is aimed at preventing any future attempts to manipulate consumer perceptions by flooding the internet with fraudulent positive feedback. The settlement also includes a substantial monetary judgment of $36.2 million, with civil penalties totaling $10.9 million, which will be suspended after Roomster pays $1.6 million based on the company’s financial inability to pay the full amount. However, if it is later determined that the company misrepresented its financial situation or violated the terms of the settlement, the full amount will become due immediately.
In addition to addressing the fake reviews, the settlement mandates that Roomster take immediate steps to monitor its affiliate marketers and prevent further fraudulent activities. This includes reviewing marketing materials from affiliate marketers, investigating consumer complaints, issuing refunds to affected customers, and terminating relationships with affiliates who misrepresent listings or present themselves as consumers.
This enforcement action marks a major step in the FTC’s ongoing efforts to crack down on deceptive reviews and misleading marketing practices that distort online marketplaces. It highlights the importance of transparency and authenticity, especially in sectors like housing, where consumers are particularly vulnerable. The deceptive practices of Roomster not only undermined trust in its platform but also harmed the very people who rely on accurate information to secure a safe and affordable place to live. With this settlement, the FTC is sending a strong message that companies cannot thrive at the expense of consumers’ trust and financial well-being.
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This article is for information purposes only. It is not intended to be and should not be relied on as legal advice for any particular matter.