Rental app bilked users of $27M, says lawsuit by AG James, FTC

A lawsuit filed by the Federal Trade Commission and New York State Attorney General Letitia James alleges that an online apartment rental app bilked users out of $27 million. Credit: Newsday/J. Conrad Williams Jr.
A rental listing app that helps individuals find apartments and roommates on Long Island and elsewhere defrauded users out of $27 million through bogus listings and fake positive reviews, according to a lawsuit by State Attorney General Letitia James and the Federal Trade Commission.
The federal suit, filed Tuesday in the Southern District of New York, contends that Manhattan-based Roomster failed to verify if the apartments listed for rent were legitimate and encouraged users to pay for a monthly subscription to access the listings.
It also contends that the site, used primarily by students and low-income renters, also purchased and uploaded tens of thousands of fake positive reviews to boost traffic to its platform.
“There is a term for lying and deceiving your customers to grow your business: fraud," James said. "Roomster used illegal and unacceptable practices to grow its business at the expense of low-income renters and students. Unlike Roomster’s unverified listings and fake reviews, their deceptive business practices will not go unchecked."
The attorneys general of California, Colorado, Florida, Illinois and Maryland joined New York and the FTC in the lawsuit, which seeks unspecified nationwide restitution for renters and civil penalties.
Company officials did not respond to emailed requests for comment on the suit.
A search of Roomster's website shows dozens of listings across Nassau and Suffolk counties. It's unclear how many Long Islanders were affected by the company's practices.
“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.
Undercover investigators for the attorney general posted an apartment listing on the site with a U.S. Post Office address that remained online for months, James' office said. Roomster never contacted investigators, the suit said, to verify the address, the apartment's specifications or the information of the lister.
To lend credibility to its unverified listings, Roomster executives saturated the internet with tens of thousands of fake 4- and 5-star reviews, the suit contends.
Roomster co-founder John Shriber and chief technology officer Roman Zaks bought more than 20,000 fake reviews from Jonathan Martinez, the owner of review sales business AppWin, as part of a "drip campaign" to increase traffic to their site, the suit alleges.
Martinez, who has agreed to pay $100,000 in fines for his role in the scheme, used more than 2,500 fake iTunes and Gmail accounts to push out the reviews, according to court filings.
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