Roomster Settlement: The FTC Cracks Down on Apartment Reviews

On August 28, 2023, the Federal Trade Commission ruled to permanently ban the online rental property listing site Roomster and its owners from buying or incentivizing customer reviews. This ruling was part of a settlement over charges that they bought fake reviews, enticing customers to pay to access online listings that appeared verified, but, in reality, were fake.

“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,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, in response to the Roomster settlement. 

Buying fake reviews is a form of customer review fraud, which is any form of deception where a business manipulates consumer feedback (that’s public and presented as objective) for their own benefit - or the detriment of direct competitors. 

What does this mean for the multifamily industry?

The core message hasn't changed:

1. Don't buy reviews
2. Don't gate reviews
3. Don't participate in deceptive review practices

Not only are these activities prohibited by Google and other review sites, as the Roomster case shows, these practices put you at legal and financial risk.

To guide B2C marketers, the FTC updated its Endorsement Guide, defining the following activities as “misleading” and in violation of the act.

Respected multifamily attorney, Jay Harris, wrote in depth about the Roomster case and what it means for others in the industry. He makes sure to stress the following points:

What NOT to do, according to the FTC

• Sort reviews by favorability, such as putting highest star reviews at the top
• Hide, delete or otherwise suppress unfavorable reviews
• Label reviews as "most helpful" when the advertiser, not other consumers, makes that determination
• Buy or otherwise incentivize positive reviews, especially fake reviews
• Threaten reviewers who publish negative reviews

Source: FTC Snares Deceptive Apartment Reviews, Issues New Marketing Guides and Proposed Rule

New FTC Rules Coming up 

By the end of September 2023, the FTC is expected to announce finalized rules banning deceptive review practices.

“The rule would trigger civil penalties for violators and should help level the playing field for honest companies.”

The FTC states that the proposed rule would prohibit: 

• Selling or Obtaining Fake Consumer Reviews and Testimonials: The proposed rule would prohibit businesses from writing or selling consumer reviews or testimonials by someone who does not exist, who did not have experience with the product or service, or who misrepresented their experiences. It also would prohibit businesses from procuring such reviews or disseminating such testimonials if the businesses knew or should have known that they were fake or false.

• Review Hijacking: Businesses would be prohibited from using or repurposing a consumer review written for one product so that it appears to have been written for a substantially different product. The FTC recently brought its first review hijacking enforcement action.

• Buying Positive or Negative Reviews: Businesses would be prohibited from providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative.

• Insider Reviews and Consumer Testimonials: The proposed rule would prohibit a company’s officers and managers from writing reviews or testimonials of its products or services, without clearly disclosing their relationships. It also would prohibit businesses from disseminating testimonials by insiders without clear disclosures of their relationships, and it would prohibit certain solicitations by officers or managers of reviews from company employees or their relatives, depending on whether the businesses knew or should have known of these relationships.

• Company Controlled Review Websites: Businesses would be prohibited from creating or controlling a website that claims to provide independent opinions about a category of products or services that includes its own products or services.

• Illegal Review Suppression: Businesses would be prohibited from using unjustified legal threats, other intimidation, or false accusations to prevent or remove a negative consumer review. The proposed rule also would bar a business from misrepresenting that the reviews on its website represent all reviews submitted when negative reviews have been suppressed.

• Selling Fake Social Media Indicators: Businesses would be prohibited from selling false indicators of social media influence, like fake followers or views. The proposed rule also would bar anyone from buying such indicators to misrepresent their importance for a commercial purpose.

Source: Federal Trade Commission Announces Proposed Rule Banning Fake Reviews and Testimonials

How Can Multifamily Marketers Stay FTC Complaint?

As a multifamily marketer, staying up to date with regulatory guidelines and industry trends is crucial for maintaining a strong online reputation and attracting potential residents. 

After reading the FTC's proposed rules for fake reviews, particularly within the context of the Roomster case, here are some actionable tips on what to do next: 

• Assess Your Current Review Practices: 

Ensure that your review management, advertising, and social media marketing policies align with the FTC’s proposed guidelines and the policies of all review platforms. Deceptive acts and strategies could result in civil penalties, so it never hurts to revisit old strategies and ensure they emphasize transparency and honesty.  

• Audit Your Existing Reviews: 

Audit all reviews for your business across all platforms. Identify any reviews that may appear questionable or may violate the FTC’s guidelines. If you come across any that seem fake or fraudulent, take action to remove or correct them. 

• Select a Reputation Management Partner That Won’t Put Your Business at Risk

Intermediaries are liable under the FTC guidelines, meaning it matters who you trust as your vendor or partner agency. These include PR firms, review brokers, reputation management companies and similar groups. Make sure your partners are careful to stay on top of the rules so your business isn’t put in danger of violating FTC rules.

• Promote a Positive Community Environment: 

Ultimately, the most effective way to garner authentic positive reviews is by providing attentive service and a positive living experience for your residents. The more time you dedicate to fostering and building trust with your residents, the more positive reviews your property will receive. 

*Note: We suggest steering away from incentivizing reviews in these situations, because incentivized reviews are prohibited by many platforms. Instead, simply ask residents for reviews, most don’t actually need an incentive to leave a review.

• Document Your Compliance Efforts:

Keep a record of any steps you have taken to ensure transparency or to rectify fake reviews. 

*If you are ever unsure about how to best proceed and comply with the FTC’s rules and guidance, seek counsel. 

• Stay in the Know

As the newest guidelines for the FTC’s rules on fraudulent reviews are not yet finalized, it’s crucial to stay abreast of any updates or changes to their guidelines regarding online reviews. 

• Inform your Team 

Educate your team on the latest FTC guidelines, and ensure that all staff members involved in marketing and review management are equipped to comply. This includes everything from understanding how to properly disclose relationships and incentives to monitoring false claims made by reviewers. If even one team member is mishandling reviews and is found out, it may negatively impact the whole company.

• Manage Your Reviews

Take the time to both respond to and monitor your reviews. By responding to both positive and negative reviews, you add a sense of legitimacy to your business and strengthen your customer relationships. By monitoring your reviews, you’re in a better position to report fake ones that may pose a threat to the integrity of your business and damage your online reputation. 

• Encourage Genuine Reviews

Instead of soliciting fake reviews, focus your resources on encouraging genuine feedback from your residents. Implement strategies like comment cards or timing review requests for after tours, lease signings, and renewals.

No matter how you ask for reviews, taking the time to encourage resident feedback will go a long way in establishing sustained review volume for your property over time. 

*If you do entrust your review generation strategy to a third-party affiliate, take the time to ensure that it follows FTC guidelines. 

In conclusion, the FTC’s rules on fraudulent reviews are a crucial safeguard for consumers and a benefit for honest competitors. 

By following these guidelines and focusing on trust marketing strategies, multifamily marketers can not only comply with the current and proposed FTC rules, but also create a marketplace where trust, transparency, and integrity prevail to benefit renters and rental housing operators alike.  

Have more questions on best review practices in the multifamily industry? Contact Widewail, we can break it down for you.