Colorado Attorney General Phil Weiser announced last month that his office, along with five other attorneys general and the Federal Trade Commission, reached a settlement agreement with Roomster Corp., which runs a website and app for people looking for roommates. The attorneys general and the federal government reached the settlement after charges that the company purchased fake reviews to lure customers to pay for the service, which also frequently listed phony living arrangements on websites like Craigslist.
Under the agreement, the company will be required to pay $1.6 million in restitution for its wrongful acts. If the company is found to have misrepresented its finances during the course of the litigation, the company will be liable for an increased judgment of $47 million.
“It’s hard enough to find somewhere to live in Colorado these days without having to navigate through fake app reviews and phony roommate listings,” said Weiser. “Companies that try to mislead or trick consumers through deceptive practices like these will be held accountable under the law.”
Under the terms of the settlement, the company and its owners are banned from paying or providing incentives for consumer reviews, using consumer reviews or endorsements when there is any relationship between the company and the reviewer, and from using any reviews or endorsements that are anything other genuine. The company will also be barred from posting any living arrangements or information in those listings that are anything other than fully genuine.
Additionally, the company will be required to provide any marketing affiliates a copy of the federal court order, get a signed acknowledgment of the order from those affiliates, and frequently monitor all marketing activities to ensure they are complying with the order. The company will also be required to terminate its relationship with any marketing affiliate that posts any false or misleading listings or reviews, and promptly refund any customers who pay for their service based on marketing practices banned under the order.
Coloradans who believe they have been targeted by deceptive marketing of any kind should file a complaint at stopfraudcolorado.gov.