With rents going up as fast as home prices, the Federal Trade Commission (FTC) and six states have sued an online apartment rental platform, accusing it of exploiting mostly low and moderate-income consumers seeking affordable housing.
Specifically, the suit claims Roomster, along with owners John Shriber and Roman Zaks, duped people looking for affordable housing by purchasing fake reviews and charging for phony listings. The complaint charges Roomster has collected millions of dollars from mostly low-income and student prospective renters who need reliable housing.
In a separate complaint, the FTC and the states charged an individual with selling Roomster tens of thousands of fake reviews, requiring him to pay $100,000 and to cooperate in the FTC’s case against Roomster.
“Roomster polluted the online marketplace with fake reviews and phony listings, making it even harder for people to find affordable rental housing,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Along with our state partners, we aim to hold Roomster and its top executives accountable and return money to hardworking renters.”
Joining the FTC in the lawsuit are the attorneys general of New York, California, Colorado, Florida, Illinois, and Massachusetts.
‘Fake reviews and other misrepresentations’
“The complaint filed today alleges these defendants deceived consumers looking for affordable housing options by filling the internet with fake reviews and other misrepresentations,” said Florida Attorney General Ashley Moody. “The alleged deceptive acts siphoned tens of millions of dollars from mostly lower-income people seeking a rental property.”
In a statement to the media, a Roomster spokesperson said the accusations contained in the suit have no merit and "represent another example of the FTC's overreach."
Roomster, based in New York, operates a website and mobile apps where users pay a fee to access living arrangement listings, including rental properties, room rentals, sublets, and roommate requests.
The government’s complaint hinges on the accusation that the company relies on fake reviews to draw paying customers to its website.