The Federal Trade Commission and six states have filed suit against Roomster Corp. and two corporate executives, accusing the residential rental listing platform of using fake reviews and unverified listings to generate tens of millions of dollars in business. According to the complaint, these practices often occur at the expense of vulnerable customers who rely on Roomster to find safe low-cost housing within expensive housing markets.
The lawsuit, filed in the Southern District of New York, alleges that Roomster violated the FTC Act and various state consumer protection laws by falsely representing that Roomster’s reviews were truthful and written by legitimate users of Roomster’s services, and by misrepresenting Roomster’s listings as verified, authentic, and available to rent.
The complaint also names an individual doing business as AppWinn, who is alleged to have provided most of the fake reviews on the Roomster platform. Over a four year period, Roomster is said to have purchased over 20,000 4- and 5-star reviews from AppWinn; AppWinn also used more than 2,500 fake iTunes and Gmail accounts to create fake reviews on Roomster’s mobile apps to drive customers to Roomster.
The complaint also alleges that Roomster regularly advertises fake or unverified listings to lure in customers to sign up for Roomster’s services. The complaint alleges that Roomster does not verify its listings as authentic despite stating otherwise in various places throughout its website.
Separately, the FTC and the states reached a settlement with AppWinn, requiring the owner to pay $100,000 and to cooperate in the ongoing litigation against Roomster.
Let this be another reminder to all retailers: the realm of online reviews is no longer the wild west. The FTC continues its recent trend of cracking down on false or misleading reviews and endorsements. Retailers that feature customer reviews on their websites should be familiar with and adhere to the FTC’s published best practices for soliciting customer reviews and working with review platforms. The states joining the FTC in this action are California, Colorado, Florida, Illinois, New York, and Massachusetts.