AG and Federal Trade Commission sue online apartment finder Roomster for defrauding renters

August 30, 2022 Brooklyn Eagle Staff

Attorney General Letitia "Tish" James, leading the charge against Amazon's alleged anticompetitive practices alongside a coalition of attorneys general.
Photo: Seth Wenig/AP

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The online platform which claims to help people find apartments and roommates, Roomster, along with its executives, are being sued by Attorney General Letitia James – along with the FTC and attorney generals of California, Colorado, Florida, Illinois and Maryland – for allegedly defrauding millions of users. The AG claims the Manhattan-based company failed to verify listings submitted to Roomster’s website with nonexistent apartments.

Low-income students and renters were particularly targeted in the company’s scheme. In the investigation prior to the suit filed and according to prosecutors, the company advertised the nonexistent listings and required users to pay a monthly subscription to view the listings.

The office of the attorney general estimates that Roomster had defrauded low-income renters of over $27 million through the false listings and reviews. There was no verification process in place to ensure that advertised rental properties were legitimate.

Investigators were able to post a listing with a U.S. Postal Office commercial facility address on Roomster. The listing used by the undercover investigators remained on the platform for months. Roomster had not reportedly contacted the investigators to verify the listing or address, the specifics of the apartment or the personal information of the lister.

“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 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 CEO of Roomster, John Shriber, and CTO Roman Zaks have allegedly bought over 20,000 fake reviews from third parties to increase traffic on the website. Jonathan Martinez, who cooperated with Shriber and Zaks in their scheme, used more than 2,500 fake gmail accounts to push reviews on Roomster. According to the AG, Martinez’s website prior to the investigation stated, “Buy app reviews & boost your app ranking.”

Martinez agreed to a consent judgement in which he agreed to a permanent injunction and the payment of $100,000.

Martinez had told Roomster’s CEO and CTO that inflating the websites with fake traffic and reviews would require a “drip campaign,” which means that fake reviews, posted steadily and consistently, would boost Roomster’s chances of being promoted on digital app stores. Reviews were dispersed purposefully to different countries, with executives directing Martinez and requesting a specific quantity of reviews in each country.

Examples of fake five-star reviews – the highest available rating – provided by the office of the attorney general 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.

Other one-star reviews, the lowest on the rating scale, were diffused by more numerous positive reviews:

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

Through their lawsuit, 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.