Attorney General James and FTC Sue Online Apartment Finder to defraud tenants


Roomster bought and published tens of thousands of fake reviews,
Unverified ads posted to defraud millions of tenants

NEW YORK – 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 allegedly defrauded millions of users nationwide. The lawsuit alleges Roomster, a Manhattan-based company, failed to verify submitted apartments on its website, published non-existent apartment listings and scammed consumers out of tens of millions of dollars. Roomster, which is primarily used by renters and low-income students, has also purchased and uploaded tens of thousands of fake positive reviews to app stores to drive traffic to its platform. Attorney General James and the FTC are co-leading a coalition of six attorneys general to end Roomster’s deceptive practices and secure restitution for those affected nationwide.

“There is a term for lying and deceiving your customers in order to grow your business: fraud. Roomster has used illegal and unacceptable practices to grow its business to the detriment of low-income tenants and students,” said Attorney General James. “Unlike Roomster’s unverified listings and fake reviews, their deceptive marketing practices will not go unchecked. I’m proud to lead this effort with the FTC to protect low-income renters and students defrauded by Roomster.

“Roomster has polluted the online marketplace with fake reviews and fake listings, making it even harder for people to find affordable rental housing,” said Samuel Levine, Director, FTC Consumer Protection Bureau. “Together with our state partners, we aim to hold Roomster and its senior executives accountable and return money to hard-working tenants.”

The investigation leading to the lawsuit uncovered a deceptive scheme by Roomster that primarily affected students and low-income tenants. As alleged in the lawsuit 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 a monthly fee to access the listing. Roomster is estimated to have defrauded thousands of low-income renters out of $27 million through fake listings and reviews.

The company said it publishes accurate and verified apartment listings, including rental properties, room rentals, sublets and roommate requests. However, the investigation revealed that Roomster had not actually checked the ads posted on its platform by users or ensured that they were real or authentic. Undercover investigators were able to easily post a listing with a US Postal Office business address on the platform. The list provided by the undercover investigators contained false rental specifications and remained on the platform for several months. At no time did Roomster contact undercover investigators to verify the address, apartment details, or legitimacy of the advertiser’s email or other personal information.

To lend credence to its unverified listings, Roomster executives have saturated the internet with tens of thousands of fake 4 and 5 star reviews. Roomster CEO John Shriber and CTO Roman Zaks bought over 20,000 fake reviews from Jonathan Martinez, who does business as AppWinn, to drive traffic to their platform . Mr. Martinez used more than 2,500 fake iTunes accounts, as well as fake Gmail accounts, to spread fake reviews of Roomster’s apps. Before Mr. Martinez became aware of this survey, his website stated, “Buy app reviews and improve your app’s ranking.”

The lawsuit alleges Roomster executives deliberated on how to post the fake reviews to make them appear real and increase the chances of them being posted on app stores. They called this program a “drip campaign”. Mr Martinez told Roomster executives the fake reviews needed to be “drained” at a “slower pace” in order to “stick”. Similarly, Mr. Zaks told Mr. Martinez to spread out reviews to be “constant and random” to increase their chances of appearing on app stores. On several occasions, Roomster executives ordered Mr. Martinez to issue a random number of notices in multiple countries, specifying in their orders the number of notices to be sent to each country.

Here are some examples of fake 5-star reviews that Roomster bought from Mr. Martinez and published:

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

As!
I’m a student on a budget so I love going through Roomster to share my room. This makes finding roommates faster and more efficient. Roomster is a good choice for me!

Roomster is great!
Especially for low income people who need rental accommodation[m]odation or students who need to rent a room because [i]t provide service with reasonable price period.

The sheer volume of false positive reviews has diluted 1-star reviews from real users, such as:

Full of scammers
I strongly advise against using this site! Because you will get scammed. This app is full of people trying to scam you! Out of 10 posts 8 [sic] are scammers DO NOT USE THIS APP!!

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

Don’t waste your time
I couldn’t give it zero. It doesn’t let me see things so I have a 7 day subscription. Reached 38 advertisers. Response received from a single legitimate lister. The rest was a rip off and 5 days of headaches. Stay away. They don’t check

Mr. Martinez was also sued today in the lawsuit against Roomster and its executives. Mr. Martinez agreed to a consent judgment in which he agreed to a permanent injunction and payment of $100,000 in monetary relief.

As part of their lawsuit, Attorney General James, the FTC, and the states are seeking a permanent injunction to end Roomster’s fraudulent practices, nationwide restitution for those affected, and civil penalties.

Joining Attorney General James and the FTC in today’s trial are attorneys general from 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 part of the Economic Justice Division, which is headed by Chief Deputy Attorney General Chris D’Angelo and the First Deputy Attorney General Jennifer Levy.

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