Rental platform Roomster to pay $1.6M in FTC settlement

Rental listing platform Roomster is barred from granting incentives for consumer reviews and will pay $1.6 million under a settlement agreement reached in a lawsuit brought by the Federal Trade Commission and the attorneys general of six states, officials announced Monday.

The complaint, filed last year, alleged that the website and mobile app drew in users looking for affordable housing with false reviews and charged customers to access fake listings. The lawsuit was brought by the FTC and the attorneys general of New York, Florida, California, Illinois, Massachusetts and Colorado.

“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,” Illinois Attorney General Kwame Raoul said in a statement.

The complaint accused Roomster and its owners, John Shriber and Roman Zaks, of cheating prospective tenants — mainly students and low-income renters in high-cost housing markets — out of $27 million since 2016.

The company did not respond to a request for comment. A law firm that represented Roomster and the owners in the case did not immediately provide a comment.

The agreement bars the platform from posting fake reviews or endorsements, falsely claiming that a listing is verified or available, and misrepresenting the terms and costs of the service.

The company will also be required to monitor its marketing affiliates by disclosing and having them agree to comply to the terms of the settlement, reviewing the marketing materials, promptly investigating consumer complaints, stopping any activity that violates the order, and refunding users who get charged as a result of a sale through marketing that violates the order.

The settlement order includes a monetary judgment of $36.2 million and civil penalties totaling $10.9 million payable to the states, but those amounts will be suspended once the defendants pay $1.6 million to the six states based on their inability to pay the full amount. If Roomster and its owners violate the terms of the order, the full amounts would immediately become due.

The full amounts would also become due if the company or its owners are found to have concealed their financial means.

Jonathan Martinez, in his capacity as CEO of app store review vendor AppWin, was also named as a defendant in the suit. Martinez previously agreed to a settlement with the FTC and attorneys general for providing tens of thousands of fake four- and five-star reviews for Roomster. Under that agreement, Martinez was ordered to pay $100,000 and cooperate in the case against Roomster.

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