Online dating company Match Group Inc. (NASDAQ: MTCH) appears to be in a lot of hot water. The company has been sued by the Federal Trade Commission (FTC) over alleged deception of its customers. That lawsuit has sparked a separate investigation by the Department of Justice (DOJ). Match has said that it denies the FTC allegations and will cooperate with the DOJ investigation.
Match, which owns the Match.com, Tinder, OKCupid, PlentyOfFish, and other dating sites, was accused by the FTC of using messages from fraudulent accounts to induce non-subscribers to sign up for subscriptions. FTC claimed that the company knew the messages were probably fake and protected their paying users from the messages, but still forwarded the messages to non-paying subscribers with a note that they needed to buy a subscription to read the message. According to the FTC, nearly half a million of those recipients went ahead and subscribed, only to find that messages were actually fakes.
In its legal filing, Match said, “Match Group believes that the FTC’s claims regarding Match.com’s practices, policies, and procedures are without merit and will defend vigorously against them.” In a statement, the company claimed that it caught and neutralized “85 percent of potentially improper accounts in the first four hours” and “96 percent of improper accounts within a day.” Some of the complaints said that the message used to induce them to sign up for a paid subscription were no longer available when they signed in because Match.com’s fraud protection system had already caught and deactivated that account.
The FTC lawsuit also accuses Match of other illegal business practices, such failing to clearly disclose special, time-sensitive requirements for getting a free six-month subscription extension and failing to provide an easy way for consumers to unsubscribe and stop recurring charges. Now, the DOJ is probing the company for law violations. Match disclosed that it received a grand-jury subpoena for documents relating to some of the marketing-related claims in the FTC lawsuit.
