FTC Targets Online Dating Service's Deceptive Practices | Practical Law

FTC Targets Online Dating Service's Deceptive Practices | Practical Law

The Federal Trade Commission (FTC) has reached a settlement with an online dating service that used fake user profiles to deceive consumers into subscribing for its service. This is the FTC's first law enforcement action against an online dating service.

FTC Targets Online Dating Service's Deceptive Practices

Practical Law Legal Update 8-586-4606 (Approx. 4 pages)

FTC Targets Online Dating Service's Deceptive Practices

by Practical Law Commercial
Published on 30 Oct 2014 • USA (National/Federal)
The Federal Trade Commission (FTC) has reached a settlement with an online dating service that used fake user profiles to deceive consumers into subscribing for its service. This is the FTC's first law enforcement action against an online dating service.
On October 29, 2014, the Federal Trade Commission (FTC) announced that it has reached a settlement with JDI Dating Ltd., an England-based online dating company, for violating the Federal Trade Commission Act (FTC Act) and the Restore Online Shoppers' Confidence Act (ROSCA). This is the first enforcement action that the FTC has taken against an online dating service.
JDI Dating operates a worldwide dating service with 18 websites. JDI Dating offered users a free plan that allowed them to create an online dating profile with personal information and photos. As soon as a new user set up a free profile, he or she began to receive messages that appeared to be from other members who lived nearby, expressed romantic interest or wanted to meet. Users could not respond to these messages without upgrading to a paid membership, which cost from $10 to $30 per month.
However, the messages were almost always from fake, computer-generated profiles JDI Dating created. These fake profiles and messages caused many users to upgrade to paid subscriptions. When users upgraded their service, JDI Dating failed to tell them that it was a negative-option plan (JDI would renew their subscriptions automatically and charge them until they canceled).
Based on this conduct, the FTC charged JDI Dating with violating:
  • ROSCA by failing to:
    • clearly disclose the terms of its negative-option plan;
    • obtain express informed consent before charging its users; and
    • provide a simple way for its users to stop recurring charges.
  • The FTC Act by misrepresenting the source of the communications from fake profiles and failing to disclose the automatic renewal terms.
Under this settlement agreement, JDI Dating:
  • Is required to clearly disclose, before obtaining consumers' billing information for a product with a negative-option feature:
    • the seller or provider's name;
    • the product's description and cost;
    • the length of any trial period;
    • the fact that charges will continue unless the user cancels the subscription;
    • the deadline for canceling a subscription; and
    • the mechanism to stop recurring charges.
  • Is prohibited from:
    • using fake, computer-generated profiles to trick users into upgrading to paid memberships;
    • misrepresenting refund and cancellation policies;
    • charging these members a recurring monthly fee without their consent.
  • Must pay $616,165 in redress.
Advertisers and marketers should review this case and the relevant laws to ensure that their own business practices comply with FTC regulations and other federal laws. For more information on the FTC Act, see Practice Note, Advertising: Overview: The Federal Trade Commission Act.