October 30, 2014
Over the last several years, online dating sites have surged in popularity, with many servicing a staggeringly large numbers of users. In order to separate from the crowd in this competitive marketplace, some players may have gone too far with aggressive marketing and billing practices. According to the Federal Trade Commission (“FTC”), at least one online dating service, JDI Dating Ltd. (“JDI Dating”), created fake, computer generated user profiles in order to induce members into purchasing premium services. To protect itself from facing further regulatory action and monetary penalties, JDI Dating settled a lawsuit filed by the FTC for almost $620,000.
Online Dating Service’s Violation of the FTC Act
However, in this case, it was JDI Dating that was allegedly engaging in misconduct. According to the FTC’s Director of Consumer Protection, Jessica Rich, “JDI Dating used fake profiles to make people think they were hearing from real love interests and to trick them into upgrading to paid memberships . . . . Adding insult to injury, users were charged automatically to renew their subscriptions – often without their consent.”
Specifically, it was alleged that JDI Dating created fake user profiles to message members that were using the dating service on a free, trial basis. However, JDI Dating prohibited users from responding to messages unless they upgraded to a premium paid membership, which ranged in price from $10 – $30 per month. The only indication that the messages were originating from fake accounts was a small icon hidden within the fake user profiles. Users were not told what the icon represented. The messages from the fake accounts induced a large number of members to purchase premium accounts which, JDI Dating allegedly failed to properly disclose, came with a recurring monthly billing feature.
The FTC filed its complaint alleging that the practices of JDI Dating violated the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).
Online Dating Service Settlement
According to the terms of the settlement, JDI Dating has agreed to refrain from further misrepresentations involving the use of fake user profiles and to clearly and conspicuously disclose the nature of recurring charges. Furthermore, the settlement prohibits the defendants from failing to honor refund and cancellation requests that comply with their policies, and failing to provide a simple mechanism for consumers to cancel services. JDI Dating has also agreed to pay a penalty fee of $616,165, which will be dispersed to affected customers.
If you are operating an online dating service and would like legal advice, or are interested in learning more about this topic, please e-mail us at firstname.lastname@example.org, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.