CHICAGO - Attorney General Kwame Raoul today joined the Federal Trade Commission (FTC) and a group of six attorneys general in announcing a settlement with the rental listing platform Roomster Corporation (Roomster) and its owners, John Shriber and Roman Zaks, over allegations the company lured customers seeking affordable housing with fake positive reviews and charged customers for access to phony listings. The agreement will permanently prohibit Roomster Corp. and its owners, John Shriber and Roman Zaks, from buying or offering incentives for consumer reviews.
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“Consumers rely on accurate information to make decisions that are in their best financial interest. When companies attempt to manipulate the marketplace with misleading claims, consumers suffer and pay the price,” Raoul said. “Today’s settlement will ban Roomster from providing compensation for reviews to lure customers. It will also require Roomster to hold its marketing affiliates accountable. I am proud to join my fellow attorneys general in announcing this settlement, and I would like to thank the FTC for their partnership as we work to protect the public from fraud and deceptive business practices.”
Roomster is based in New York and operates a website and mobile app that users can pay a fee to access housing listings, including rental properties, room rentals, sublets and roommate requests. The company claims to offer “authentic” and “verified” listings.
Today’s settlement resolves a lawsuit filed by Raoul, the FTC and a group of six attorneys general in August 2022. According to Raoul and the coalition, Roomster and its owners have taken tens of millions of dollars from largely low-income and student renters who need reliable housing the most and can least afford to lose money. The lawsuit alleged that Roomster, along with Shriber and Zaks, used fake reviews and other misrepresentations to lure consumers to its platform to pay for access to listings that often turned out to be fake.
Under the settlement, the defendants will be banned from paying for consumer reviews and posting fake reviews or endorsements for their products. They will also be barred from falsely claiming that a housing listing is verified, authentic, or available and from misrepresenting the cost, fees, terms and conditions, and other aspects of their listing service.
The defendants will be required to monitor their marketing affiliates by:
- Disclosing the terms of the settlement and having their marketing affiliates agree to comply with the terms of the settlement.
- Routinely monitoring and reviewing marketing materials their affiliates create, such as websites, emails, text messages, hyperlinks, sponsored search terms and listings.
- Promptly investigating consumer complaints related to marketing affiliate activity to determine whether affiliates are engaging in practices prohibited by the order and immediately terminating any affiliate found to have engaged in such practices.
- Providing full refunds to each consumer who pays the defendants as a result of a sale through a marketing affiliate who violates the order.
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.
Jonathan Martinez – doing business as AppWinn – previously agreed to a settlement with the coalition for allegedly deceptively promoting the Roomster platform by providing tens of thousands of fake four- and five-star reviews. As part of a proposed order with the FTC and its state partners, Martinez is required to pay $100,000 and was required to cooperate in the case against Roomster.
Joining Raoul in the settlement with Roomster are the FTC and the attorneys general of California, Colorado, Florida, Massachusetts and New York.
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