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In brief: Attorneys General from six states joined the Federal Trade Commission (FTC) in a lawsuit against an app platform called Roomster. The complaint accuses the company of "deceptive tactics" and outright fraud. Roomster owners John Shriber and Roman Zaks and AppWinn owner Jonathan Martinez are listed as defendants in the filing.
Roomster is an app available through Apple's App Store and Google Play that supposedly helps people find roommates or rooms to rent. The FTC claims it's very popular with college students and other low-income individuals that can't reasonably afford a place on their own. Think of it like Zillow, except for people looking to cohabitate with others.
However, the FTC says that Roomster employed AppWinn's Jonathan Martinez to post thousands of fake reviews on listings. Furthermore, the complaint alleges that many of the rentals advertised as "real, available, and verified" are entirely bogus and don't even exist.
Shriber and Zaks have supposedly raked in "tens of millions of dollars" by charging a fee to access information on these fake listings.
"Roomster and its owners John Shriber and Roman Zaks have taken tens of millions of dollars from largely low-income and student prospective renters who need reliable housing the most and can least afford to lose money," stated the FTC in a Tuesday press release.
Complaint alleges Roomster and its owners John Shriber and Roman Zaks have taken tens of millions of dollars from largely low-income and student prospective renters who need reliable housing the most and can least afford to lose money. /2— FTC (@FTC) August 30, 2022
To be clear, Shriber and Zaks are not accused of posting fake listings themselves. Instead, they are not simply not vetting properties submitted to the platform, which opens the door for rental scams. In one instance, they marked a rental "verified," but a simple address check revealed it was a commercial US Post Office building. As one legit review put it:
"Idk of all those good reviews are fakes too or what. But I literally reach out to at least 50-60 people and I received few msg offering a place. And all of them just fake. Same exact email you give the deposit and first month rent and they will mail you the key. Cause they 'at funeral, in different country, traveling, blah blah blah blah.' [sic]"
Martinez's role was to use his 2,500+ iTunes accounts to load up Roomster's real and fake listings with fraudulent reviews the FTC refers to as "testi-phony-als." The FTC obtained email records showing that Roomster had instructed Martinez to "make sure it's always a random number of reviews, so it looks more natural." Roomster sent this communication after the FTC notified Shriber and Zaks it had opened an investigation into their company.
FTC and the states also filed a proposed order against Jonathan Martinez—who allegedly sold Roomster tens of thousands of fake reviews—requiring him to pay $100,000 and cooperate in the FTC's case against Roomster. /3— FTC (@FTC) August 30, 2022
Martinez copped a deal to cooperate with investigators and signed a proposed settlement for his part in the scam. If the court signs off, he will be banned from selling reviews and have to pay a $100,000 fine. The fine will go to the six states listed in the lawsuit — New York, California, Colorado, Florida, Illinois, and Massachusetts. He must also notify the App Store and Google Play that Roomster paid him to plant fake reviews and point out to them which ones are his.
The complaint does not specify specific penalties Rooster and its owners could face, only mentioning that their actions violate state laws and the Federal Trade Commission Act.
The defendants have not commented on the investigation or its allegations.