Roomster settles with FTC and six states for $1.6 million for tricking renters with fake reviews and unverified listings

When searching for a place to live and roommates, it’s important to get accurate information. And reviews from platforms that can help you in your search need to be honest and trustworthy.

But according to the Federal Trade Commission and six states suing Roomster and its owners, the room and roommate finder platform posted reviews and other information that weren’t accurate.

The lawsuit

A lawsuit filed in 2022 alleges Roomster posted fake positive reviews and made deceptive claims about its listings being real, available, and verified – to convince people to use its platform. The FTC and states also filed a separate action against “AppWinn” operator Jonathan Martinez, who the lawsuit alleges supplied thousands of the fake reviews to Roomster.

When a company has a lot of fake, glowing reviews online, they can dilute real ones that describe customers’ actual experiences, said Kira Krown, consumer education specialist for the FTC. This can make it difficult for people to make informed decisions about which products or services to buy and use.

Roomster’s customers – mostly students, people with lower incomes, and those living in areas with little affordable housing – have ended up paying millions of dollars for information on rentals that often didn’t even exist, Krown said.

Examples of Roomster reviews

Some examples of the fake five-star reviews that Roomster bought from 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!

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 large volume of positive fake reviews diluted 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!!

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

The settlement

The settlement with the defendants includes a judgment of $36.2 million and 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 due to the defendants’ inability to pay the full amount, the FTC said in a statement.

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 become due.

The FTC worked with attorneys general from New York, California, Colorado, Florida, Illinois, and Massachusetts, in filing the 2022 lawsuit against the company.

Tips for evaluating online reviews

If you’re looking at online reviews for housing or anything else, Krown has these suggestions:

• Think about the source of the reviews you’re reading. What do you know about the reviewers that makes 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 such as “complaint,” “scam,” or “fraud” to see what issues others might have had.

If a company makes false or misleading claims, you can report it to the FTC at ReportFraud.ftc.gov.

Comments

[azure]

Why is Roomster still in business if there's so much evidence that it either deliberately let post or did post fake reviews or ineffectively policed its site or service to the substatial detriment to users? And then the AGs, et al, agreed to let Roomater not only stay in business but actually pay only 1.6 million. Too bad non-wealthy, non-corporate entities don't get the same sweet deals when they commit scams, fraud, etc. Did Roomster even have to admit it was at fault? Does Roomster have to provide proof of monthly checks for validity of its reviews to the various AG offices? And pay them the cost of personnel to review/validate Roomster's "checks"?

Burden't still on the user then isn't it? You even say so. So, what's the point? How many years of complaints did the FTC and states get before they acted?

Just like WellsFargo banks, scams it customers not once but 2-3 times, but doesn't lose its bank charter.

Does the Roomster platform even have to post on their platform the results of litigation as a way of warning users?