FTC lawsuit: Roommate-finding app Roomster bought fake reviews, was packed with scam listings

California, the Federal Trade Commission, and five other states filed a lawsuit Tuesday against the rental listing app Roomster for duping mostly low-income and student renters with fake reviews and phony listings.

Roomster, an app for finding a roommate or a room for rent, allegedly purchased thousands of fake positive reviews to lure renters into paying for a subscription and claimed its listings were "verified" and "authentic" when in fact they were full of scams, according to California Attorney General Rob Bonta's office.

"Millions of hardworking Californians are struggling to find housing within their budgets. When people see affordable rooms for rent on highly rated apps like Roomster, they trust that these 'verified' listings are what they say they are," Bonta said in a statement. "Unfortunately, Roomster hasn't been honest about the source of its popularity or its commitment to preventing fraud on its app. Roomster bought fake reviews and let scams proliferate, and consumers paid the price."

The app, which has thousands of five-star reviews in both the Google and Apple app stores, advertised primarily private rooms in cities and towns around the world, and was geared toward lower-income renters. It made money by charging a subscription fee so users could message potential roommates or landlords. The FTC also alleges Roomster advertised fake listings on sites like Craigslist to lure renters to its platform.

"Roomster polluted the online marketplace with fake reviews and phony listings, making it even harder for people to find affordable rental housing," Samuel Levine, director of the FTC's Bureau of Consumer Protection, said in a statement.

An investigation into Roomster found that the company purchased at least 20,000 fake positive reviews for the app in the Google and Apple app stores, Bonta's office said. According to the lawsuit, Roomster co-founder John Shriber instructed Jonathan Martinez, the owner of review sales business AppWin, via email to produce "lots of 5 star IOS app reviews" and that he "would like to be #1" for people searching for roommates.

Roomster also claimed its app offered "millions of verified listings," but Bonta's office alleges the app featured a myriad of scam listings and that the company did not appear to do any sort of verification of posts.

In a related case, Martinez and AppWinn agreed a plea deal in exchange for cooperating in the FTC's case against Roomster. Martinez agreed to pay $100,000 to resolve allegations they violated the False Advertising Law and Unfair Competition Law by promoting Roomster through fake online reviews in the Apple and Google app stores, notify those app stores that Roomster paid him for those reviews, and stop selling reviews or misrepresenting consumer reviews.

The lawsuit was filed by the FTC, California, and the attorneys general of Colorado, Florida, Illinois, Massachusetts, and New York, where Roomster is based.