Reunion Web site Classmates.com has agreed to pay $9.5 million to settle a class action accusing the site of false advertising.
The lawsuit, filed in 2008, claimed that a user would receive an e-mail from the site informing him that an old classmate wanted to get in touch. In order to receive the message and respond, however, users needed to upgrade their membership in order to check their Guestbook.
Users then paid to become a “gold” member, only to find out that no message was waiting in their Guestbook, the complaint alleged.
Under the agreement, all members of the site – an estimated 3.16 million people – will receive a $2 credit toward the future purchase of a gold membership.
Subclass members – those who actually upgraded to the gold membership level after receiving a message from the site – will receive either a cash payment of $3 or a $2 credit toward the purchase or renewal of a gold membership.
Classmates.com admitted no wrongdoing under the settlement.
The settlement comes as the site faces a new class action lawsuit, filed in February.
The suit alleges that Classmates.com changed its default privacy settings and made more information about members – like their name and photo – publicly available. The plaintiffs claim that the new settings were not sufficiently explained and that they now face greater exposure to security risks, like identity theft.
Why it matters: While users’ empty Guestbook may have reminded them of high school in more ways than one, Classmates.com’s e-mail marketing tactic is not that unusual. Other companies – like dating Web sites – that use similar methods to encourage users to upgrade their membership, should take note of the settlement.