INDIANAPOLIS — When people are searching for someone to live with, or somewhere to live, they rely on reviews, to be honest. However, according to a new lawsuit, a room and roommate finder platform was anything but honest in its practices.
The lawsuit filed by the Federal Trade Commission and six states alleges that the rental listing platform Roomster duped people into seeking affordable housing by paying for fake reviews and then charging for access to phony listings. This resulted in largely low-income and student renters losing tens of millions of dollars.
The FTC claims the company did this by posing fake positive reviews and making deceptive claims about its listings being real, available, and verified.
“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 of the 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.”
The FTC said when a company has a lot of fake, glowing reviews online, they can dilute real ones that describe customers’ actual experiences. This can make it tough for people to make informed decisions about which products or services to buy and use.
The lawsuit also alleges the website misrepresented that it offers millions of “verified listings.” The FTC claims the company didn’t verify listings or make sure they were legitimate and authentic. An investigation by the FTC found 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.
“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 New York Attorney General Letitia 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.”
Along with the lawsuit, the FTC filed a proposed order against Jonathan Martinez. Under the company AppWinn, the FTC says Martinez supplied thousands of fake reviews to Roomster.
The complaint alleges that Roomster’s operators told Martinez to take steps to make the reviews look real. For example, Shriber urged Martinez to spread out the reviews so they were “constant and random.”
The FTC says the lawsuit is part of their efforts to crack down on fake and deceptive reviews. The commission provided some tips for people looking at online reviews for housing or anything else:
- Think about the source of the reviews you’re reading. What do you know about the reviewers that make them trustworthy?
- Compare reviews from a variety of well-known sources, not just one site. Start with websites recognized for having credible and impartial reviews.
- Search online for the company name along with terms like “complaint,” “scam,” or “fraud” to see what issues others might have had.
The FTC encourages anyone who suspects a company of making false or misleading claims to report it at ReportFraud.ftc.gov.