As if hunting for an apartment wasn’t bad enough.
Roomster, an online-apartment finding service, has reached a multi-million dollar settlement over claims it used a fake-listing and review scam to lure in desperate, low-income renters searching for a place to live.
The company and its owners, John Schriber and Roman Zaks, admitted they paid for tens of thousands of fake positive reviews to drive up their presence in app stores and created phony apartment listings to attract customers, according to the settlement reached with the Federal Trade Commission and the attorneys general of six states.
As part of the agreement, the company has been hit with a $36.2 million fine as well as civil penalties of $10.9 million. But the FTC and the states involved agreed to suspend those penalties if the firm pays $1.6 million to the states, given that the company and its owners are unable to pay the full amount.
If Roomster fails to make the $1.6 million payment or is discovered to have misrepresented its financial situation, the full penalty will be restored, the agencies said.
When the suit was announced in late 2022, authorities said they believed the company had defrauded its customers – mostly low-income apartment seekers — out of $27 million.
“Amid a housing crisis, Roomster deceived and misled hundreds of students, young adults, and low-income renters for its own benefit,” said Letitia James, the attorney general for New York, where the firm is based. “Looking for an apartment can be stressful, and the last thing renters need is to be scammed by fake reviews and apartments that might not even exist.”
Messages left with an attorney for Roomster, Schriber and Zaks, didn’t immediately respond to a message seeking comment.
Other states that joined in the suit were California, Colorado, Florida, Massachusetts and Illinois.
Authorities said Schriber and Zaks paid for at least 20,000, fake 5-star reviews from a bogus review mill to make their service more appealing to apartment hunters and to suppress a slough of negative reviews accusing the site of being a scam.
The lawsuit also alleged that the firm utilized numerous phony listings for apartments that didn’t exist to make their site more appealing. Authorities also say the firm did little to vet whether apartment listings on its site were real and that those posting them were legitimate, despite making claims to the contrary.
At one point, undercover investigators posted a fake listing using an address of a post office building which remained on the site for months without question, the suit said.
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