FTC Fines Dating Firm $616,000 for Fake Profiles and Billing

LOS ANGELES—The dating side of the industry was miffed last year when lawyers warned about increased interest by the government into the questionable business practices of online dating services. The warning was not based on nothing; the Federal Trade Commission (FTC) does not engage in investigations of businesses for its health. As the lawyers said at the time, if you are already in their crosshairs, if they have already started looking into your business, you are already essentially fucked. They may not have used those exact words, but the meaning was the same. Government moves slowly, however, and it was only yesterday that the FTC announced it had reached a settlement with a U.K.-based company called JDI Dating Ltd. under which the company—which operates CupidsWand.com, FlirtCrowd.com and FindMeLove.com—agreed to stop using "fake, computer-generated profiles to trick users into upgrading to paid memberships and charging these members a recurring monthly fee without their consent. The settlement also requires the defendants to pay $616,165 in redress." According to the Stipulated Order filed by the FTC in its case against JDI, the regulator sees fake profiles as a deceptive business practice and as such, in addition to the fine, it is levying specific conditions on the company that are designed to ensure that no future customers are deceived. To do that, JDI had to agree to an intricate regimen of disclosures to its members, including making and maintaining for three years voice recordings of certain transaction with consumers, that "must be provided upon request to the consumer, the consumer’s bank, or any law enforcement entity." In addition to making fake, computer-generated profiles—which the government calls "Virtual Cupids"—the FTC also found that JDI "failed to tell subscribers that their subscriptions would be renewed automatically and that they would continue to be charged until they canceled. To avoid additional charges, members had to cancel at least 48 hours before their subscriptions ended. Information about the automatic renewal feature was buried in multiple pages of densely worded text that consumers could see only by clicking a 'Terms and Conditions' hyperlink. Consumers were not required to access this hyperlink as part of the enrollment process. Remedies to prevent such billing practices in the future are of course also included in the Order, adding meat to the claim made last year by industry lawyers that once the FTC instigates an investigation of your company, "your life as you know it will never be the same." It's a reminder to those who perennially accuse industry lawyers of being "fear mongers" that more often than not the mongering is justified, and ignoring it could be a big mistake.