The U.S. Federal Trade Commission (FTC), working with a coalition of state attorneys general, announced a $1.6 million settlement from Roomster, an online apartment search platform, and its owners, John Shriber and Roman Zaks, who were accused of defrauding millions of renters nationwide with unverified apartment listings and fake reviews.
The New York City-based Roomster was accused of failing to verify apartments submitted to its website, posting nonexistent apartment listings, and scamming consumers with fake positive reviews that it bought and posted online. Shriber and Zaks were also accused of buying more than 20,000 fake reviews from Jonathan Martinez, who did business as AppWinn, to increase traffic to their platform – Martinez used more than 2,500 fake iTunes accounts plus fake Gmail accounts to push out the phony reviews on Roomster’s apps.
The settlement 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 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 required Roomster to ensure that its listings are verified and authentic and to monitor its affiliate marketers.
The six states that joined the FTC in the lawsuit were California, Colorado, Florida, Illinois, Maryland and New York.
“Amid a housing crisis, Roomster deceived and misled hundreds of students, young adults, and low-income renters for its own benefit,” said New York Attorney General Letitia James. “Today’s consent order blocks Roomster from posting any more fake reviews on unverified listings and prevents the company from harming renters trying to find a home in New York. Looking for an apartment can be stressful, and the last thing renters need is to be scammed by fake reviews and apartments that might not even exist. I thank the FTC for their partnership to protect renters nationwide.”