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Fake reviews, scam listings put Roomster app under regulatory fire

Six states joined the Federal Trade Commission in a civil complaint that says one company's unscrupulous tactics wrought a $27 million scam on the affordable housing market.

MANHATTAN (CN) — Accusing the apartment-hunting app Roomster of pulling a bait-and-switch on its users, the U.S. Federal Trade Commission and six states brought a federal complaint Tuesday that describes an inventory of fake listings and charges to access them.

Roomster claims to offer “authentic” and “verified” listings, but the FTC says it does not verify listings or ensure the rental listings are legitimate and authentic.

Indeed, the FTC investigated Roomster undercover with a fake listing for a nonexistent apartment at the same address as a U.S. Post Office commercial facility. Rather than verify anything, according to the complaint, Roomster instantly accepted and published the ad, complete with fictitious rental specifications that described an apartment at less than half the price and twice the square footage as those in the represented market.

“The Roomster Defendants post listings on their Roomster platform immediately upon request, as long as the street address associated with the listing is recognized by the platform,” the complaint states. “The Roomster Defendants do not determine whether their listings are authentic and, despite purporting to offer only residential listings, do not verify whether the listed address is residential or commercial.”

Unsurprisingly, consumers who paid for access to Roomster's listings only to find that the apartments were all fake wrote negative 1-star negative reviews. A few are quoted in the FTC's complaint: "Full of scammers," "Worst app ever waste of money" and "Every profile on here seems to be a fake profile.”

Roomster meanwhile sought to bury and dilute the impact of those negative reviews, according to the FTC, by buying thousands of fake positive reviews for its app in the Google and Apple app stores.

"The Roomster Defendants have taken in excess of $27 million from consumers, many of whom can least afford to lose money," the complaint argues, noting that those who need help securing affordable housing tend to be students and low-income renters.

To boost traffic on its platform, the complaint accuses Roomster of buying and uploading tens of thousands of fake positive reviews on app stores. It says Roomster also laid bait for fake listings by advertising on Craigslist, either directly or through their affiliates, to further induce consumers to pay for the company’s platform.

Representatives for Roomster did not immediately respond to requests for comment Tuesday afternoon.

The complaint includes emails between Roomster co-founder John Shriber and co-defendant Jonathan Martinez, owner of the review sales business AppWinn, showing Shriber asking for “lots of 5 star IOS app reviews” and stating that he “would like to be #1” in search results for people seeking roommates.

Martinez, who lives in California, is named as a co-defendant for his role in the fraud but he paid $100,000 to the FTC’s six state partners — New York, California, Colorado, Florida, Illinois and Massachusetts — as part of a cooperation agreement and settlement.

The complaint says Martinez utilized more than 2,500 fake iTunes accounts, as well as fake Gmail accounts, to push out fake reviews on Roomster’s apps.

“Before Martinez became aware of this investigation, his website stated ‘Buy app reviews & boost your app ranking.’ By selling fake reviews to the Roomster Defendants, Defendant Martinez helped the Roomster Defendants distort the market and deceive potential users of the Roomster platform,” the complaint states.

The FTC is seeking a settlement stipulation with Martinez that would require him to stop selling reviews and to notify the Apple and Google app stores that Roomster paid him for posting reviews on each platform.

In New York, Assistant Attorney General Melvin Goldberg with the consumer frauds bureau is overseeing the case.

“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,” New York Attorney General Letitia James said on Tuesday. “Unlike Roomster’s unverified listings and fake reviews, their deceptive business practices will not go unchecked.”

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