Roomster is the latest company banned from using fake reviews by the Federal Trade Commission. The FTC said the company bought fake reviews to trick customers into paying to access phony living arrangement listings.
Although it’s just one company, Roomster was responsible for tens of thousands of fake four- and five-star reviews. The FTC’s response shows it’s still waging a seemingly endless war against misleading endorsements. Fake reviews have grown to be a huge problem over the last few years, giving legitimacy to scam sites or shoddy products, with retail giants like Amazon long wrestling with the issue. In 2021, the FTC warned over 700 companies about using deceptive reviews, lest they incur fines up to $43,792 per violation. At the time, the director of the FTC’s Bureau of Consumer Protection, Samuel Levine, said that fake reviews undercut honest businesses.
This action also comes as the FTC is stepping up its efforts to crack down on fake reviews, including proposing a new rule in June. The rule aims to prohibit selling or obtaining fake consumer reviews, review hijacking and buying positive or negative reviews. The rule would also crack down on companies writing reviews of their own products, controlling review websites that claim to provide independent opinions, suppressing negative reviews and falsifying social media influence.
“Today’s settlement bans Roomster and its owners from buying or incentivizing reviews, cuts off their ability to blame phony listings on their affiliate marketers, and requires them to pay monetary judgments to our six state partners,” Levine said in a statement. “Baiting renters with fake reviews and bogus listings harms those trying to find an affordable place to live and cheats honest competitors, undermining the online marketplace.”
The proposed order bans the New York-based company and its owners from paying for and distributing fake reviews on top of having to pay millions in fines.