Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC files first action against an online dating service, (Oct 29, 2014)

By Jody Coultas, J.D.

JDI Dating Ltd., an online dating service, has agreed to refrain from using fake, computer-generated profiles to trick users into upgrading to paid memberships and charging these members a recurring monthly fee without their consent. A proposed consent decree, which also requires JDI to pay $616,165 in redress, would settle FTC allegations that the dating services violated the FTC Act and the Restore Online Shoppers’ Confidence Act. According to the FTC, this is the agency’s first action against an online dating service (FTC v. JDI Dating Ltd., FTC File No. 132 3179; Case: 1:14-cv-08400).

In its complaint, the FTC alleged that JDI offered a free plan that allowed users to set up a profile with personal information and photos. Members received messages that appeared to be from other members, but were almost always from fake, computer-generated profiles, called “Virtual Cupids,” created by JDI. Users were unable to respond to these messages without upgrading to a paid membership, and many upgraded after receiving the fake messages.

The FTC also alleged that JDI failed to tell subscribers that their subscriptions would be renewed automatically. 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 that consumers were not required to access this hyperlink as part of the enrollment process.

The proposed consent decree, awaiting approval in the federal district court in Chicago, prohibits JDI from failing to disclose that members will receive communications from virtual profiles who are not real people. Before obtaining consumers’ billing information for a product with a negative-option feature, JDI must clearly disclose the name of the seller or provider, a product description and its cost, the length of any trial period, the fact that charges will continue unless the consumer cancels, the deadline for canceling, and the mechanism to stop recurring charges.

The injunction also bars the defendants from misrepresenting refund and cancellation policies, and failing to disclose clearly the terms of a negative option plan before a consumer consents to pay. JDI was also barred from selling or otherwise benefitting from customers’ personal information, and from using consumers’ billing information to obtain payment without their informed consent.

Attorneys: Steven M. Wernikoff for FTC. Lawrence G. Walters (Walters Law Group) for JDI Dating Ltd.

Companies: JDI Dating Ltd.

News: ConsumerProtection FederalTradeCommissionNews