Avid Life Media, Inc., and Avid Dating Life, Inc.—the companies that own and operate dating website Ashley Madison—are facing a new problem: a false advertising lawsuit.
Designed to help individuals find others looking for sexual encounters, the Ashley Madison website targeted married individuals with the slogan, "Life is short. Have an affair." The site gained recent notoriety when hackers released the personal information of users.
Maryland resident Christopher Russell alleges that after separating from his wife, he relied on representations that Ashley Madison made about women who used the service and that he paid approximately $100 to interact with such women on the site. One problem: the women were not real, Russell claims.
The complaint alleges that the website defrauded users by creating fake female profiles and representing that it had 5.5 million female profiles, when only a small number of such profiles belonged to actual women who used the site. It also created over 70,000 female bots to send male users millions of fake messages. "More likely than not, these women were female bots with fake profiles created by Ashley Madison," according to the complaint.
The complaint also alleges that since users of the website buy credits to engage with other members and redeem such credits by sending messages to prospective matches, the messages sent by the fembots effectively tricked male users to create a profit for Ashley Madison. These factors contributed to the $115 million in gross revenue in 2014 and pretax profits of $55 million earned by its parent company.
Interestingly, Russell's lawsuit relies on the information released by the hackers to support his allegations. Data released "revealed that 'some significant percentage—the hackers say 90-95 percent—of female profiles on the site are fake and are meant to lure paying male clients into believing that the place is teeming with women ready to be whisked away to hotel rooms,'" the putative class action alleges.
Computer code for the site included descriptions for how the fembots should engage with male users, including tips like "randomizing start time so engagers don't all pop up at the same time." Analysis of the information released by the hackers revealed that bots chatted with 11,030,920 men (and just 2,409 women).
For alleged violations of Maryland's Consumer Protection Act as well as unjust enrichment, the complaint seeks compensatory damages and/or restitution or refund, as well as punitive damages.
To read the complaint in Russell v. Avid Life Media, click here.
Why it matters: The complaint alleges that Ashley Madison executives engaged in a willful and knowing fraud, citing internal emails and other communications that document the use of fembots. It also cites the company's response to an investigation by the California Attorney General in 2012 that "criminal elements" and "random fraudsters" were creating fake profiles on the site.