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Tuesday, June 18, 2024

FTC, State Partners Secure Proposed Order Banning Roomster and Owners from Using Deceptive Reviews

The Federal Trade Commission will permanently ban Roomster Corp. and its owners, John Shriber and Roman Zaks, from buying or incentivizing consumer reviews as part of a settlement over charges that they bought fake reviews to entice consumers to pay for access to living arrangement listings that they claimed were verified, authentic, and available but often turned out to be fake.

In a complaint first announced in August 2022, the FTC, joined by attorneys general from New York, California, Colorado, Florida, Illinois and Massachusetts, also charged that Roomster and its owners, either directly or through affiliate marketers, used phony listings on other sites like Craigslist to drive consumers to Roomster’s platform, where they paid fees only to discover the listings didn’t exist.

“Today’s settlement bans Roomster and its owners from buying or incentivizing reviews, cuts off their ability to blame phony listings on their affiliate marketers, and requires them to pay monetary judgments to our six state partners,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Baiting renters with fake reviews and bogus listings harms those trying to find an affordable place to live and cheats honest competitors, undermining the online marketplace.”

The FTC says New York-based Roomster saturated the internet with tens of thousands of four- and five-star fake reviews that it largely bought from Jonathan Martinez, doing business as AppWinn, who already agreed to settle the FTC’s charges. Consumers who paid for Roomster’s service complained that many of the company’s listings for living arrangements were fake and that, contrary to its promises, Roomster failed to verify that its listings were legitimate and authentic, according to the FTC.

The proposed order will permanently ban Roomster, Shriber, and Zaks from paying or otherwise providing incentives for consumer reviews, and from using or disseminating reviews where they have a relationship with the reviewer that might affect the review’s weight or credibility.

In addition, the proposed order includes a monetary judgment of $36.2 million and civil 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 based upon the defendants’ inability to pay the full amount. 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 immediately become due.

The order also prohibits them from misrepresenting: that any review is truthful or represents a real user; that any rental listing is verified, authentic, or available; or any other material fact. It also requires Roomster to take steps to monitor its affiliate marketers. This includes routinely reviewing their marketing materials without notice; investigating consumer complaints about affiliates; providing refunds to consumers who were impacted by affiliate conduct that violated the order; and halting payments and terminating affiliates who pose as consumers or misrepresent their status in other ways.

The Commission voted 3-0 to authorize the staff to file the stipulated order. The FTC filed the stipulated order in the District Court for the Southern District of New York.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

The lead FTC staffer on this matter is Angeleque Linville from the FTC’s Southeast Region.

Official news published at https://www.ftc.gov/news-events/news/press-releases/2023/08/ftc-state-partners-secure-proposed-order-banning-roomster-owners-using-deceptive-reviews

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