Roomster Speaks out Against Meritless FTC Lawsuit

On Tuesday, August 30, the Federal Trade Commission (“FTC”) filed a lawsuit against Roomster, making a number of meritless allegations based on falsehoods and inaccuracies. As the litigation moves forward, we look forward to defending ourselves in court.

In the meantime, we want to make the facts clear: we have helped millions of subscribers find simple and safe rooming solutions and will continue to do so in a legal and ethical manner. The FTC is clearly overreaching in a performative attempt to protect consumers, when in reality there is a lack of understanding of our business.

The FTC’s Misrepresentation of Our Business Practices

The FTC's allegations are that we directed an independent contractor, Jonathan Martinez, to post fake positive reviews about Roomster. Additionally, the FTC claimed that we use fake listings to lure consumers onto our platform. To be clear, there is absolutely no merit to the FTC’s allegations.

In fact, we are proud of the many reviews Roomster has received over the course of our nearly two decades in business. While most of them have been positive and recognized the valuable service that Roomster provides, some have been negative, providing constructive (and sometimes less constructive) feedback.  We read these reviews and take the constructive feedback to heart, which helps us evolve our platform to better serve our subscribers.  We have found this to be a valuable process and have no desire to limit the feedback we find so crucial to improving our business for the benefit of our subscribers.

Further, Roomster has extensive measures in place to ensure all listings are real, available, and verified. You cannot create a published listing on Roomster without passing a series of technological verification steps, then passing a review from our human powered verification team, which involves a review of all listing photos.

Unfortunately, despite our efforts to work with the FTC for nearly two years, they refused to sit down with Roomster to understand our business and important information such as this.

Source of Many of the FTC’s Allegations

Instead, the FTC has decided to go down the route of pursuing this meritless lawsuit, including making a deal with Jonathan Martinez, an independent contractor we worked with from 2016 to 2019 who is the sole individual responsible for the fake reviews.

In exchange for his cooperation, Martinez is required to pay only a fine of $100,000, which is less than what his contract with Roomster paid from 2016 to 2019. So, in the end, Martinez gets to keep the money he made posting fake reviews without the knowledge of Roomster and the FTC tries to make Roomster pay the price for his actions.

Not only has the FTC misrepresented our business practices in a way that damages our reputation, it is also attempting to harm our business without giving Roomster due process in court.  As part of the agreement that allowed Martinez to keep money he made posting fake reviews, Martinez is obligated to contact major app stores to provide them the same information he provided the FTC, which could be extremely harmful to our business. This represents another example of the gross overreach by the FTC and their disregard for the basic assumption of innocence that underpins our legal system.

Next Steps

We have always operated our business with honesty and integrity. To that end, we look forward to defending our position and business practices in the U.S. District Court for the Southern District of New York, including a motion to dismiss the FTC and States’ complaint due to its legal and factual insufficiencies as well as an action against Martinez based on his sole culpability for these falsified customer reviews.

As we work to prove the FTC’s allegations false and pursue possible legal remedies against Martinez, we are going to continue focusing on doing what we do best – providing a platform that connects people who are finding a roommate or a room.

As we saw over the past few years, our platform has made a difference for so many subscribers, particularly during a time of unprecedent financial pressure and market turmoil. We look forward to continuing to offer this service to our subscribers and proving these allegations wrong.