It is likely you will remember the story of the Ashley Madison hack where, still unknown, perpetrators hacked into ALM's servers and published members details on a publicly accessible database after the company refused to shut down its operations.
I'm not sure about you but I had a morbid fascination with the story, it was like watching a slow motion train wreck.
Not only were the morals of its members (generally men looking to have affairs) publicly called into question, but it turned out that the company had used a basic form of AI impersonating women (a Gizmodo investigation found that the first 'fembot' was internally called "Sensuous Kitten" had been developed in early 2002) to encourage new users, who had signed up for free accounts, to buy 'man credits' - costing a not insubstantial amount. These 'man credits' then allow users to chat to 'women' using the site. According to some reports, only around 15% of female profiles on Ashley Madison were actually women, the rest were 'fembots' generated by computer algorithms.
ALM's revenue tanked in the year following the hack, but surprisingly over four million new accounts have also been created, despite the fact that ALM's security is still in the process of being brought up to industry standard.
It doesn't surprise me to learn that the United States Federal Trade Commission has now taken an interest in ALM's operations. I presume, but this has not been confirmed by either the FTC or ALM, that this will relate to potential breaches of the US's rules relating to unfair and deceptive acts or conduct.
Those provisions are the US equivalent of the Fair Trading Act (NZ) and Australian Consumer Law's provisions relating to misleading and deceptive conduct. It is almost certain if the conduct had occurred in New Zealand or Australia then ALM would have been in breach of the FTA / ACL.
In 2014 another company, UK based JDI Dating, reached a settlement with the FTC for using similar practices on its dating sites. JDI had to pay a fine of US$616,165.
ALM's Ashley Madison operations were previously queried by the Californian Attorney General, although the Californian AG did not pursue its investigation at that stage.
If the FTC is successful, we are likely to see other consumer law regulators commencing, or reopening, investigations into ALM's practices, particularly given now ALM has admitted using 'fembots', and the issue still has a relatively high profile.
Normally I hate tawdry reality TVesque stories but I'm actually looking forward to the next installment of this salacious saga.
Avid Life Media (ALM), the corporate parent of hacked extramarital dating site Ashley Madison, is being investigated by the US Federal Trade Commission according to the company’s new executive team. Over the following year, ALM lost more than a quarter of its revenue ... As well as the hack itself ... the breach exposed several other potential red flags in the company. Most damningly, the database suggested that a huge proportion of the female users of the site were in fact fake accounts, created and operated by Ashley Madison to lure men into using and paying for the site. [An EY report ALM commissioned showed] the company had indeed made fake profiles, which were then run automatically to impersonate real women. According to the report, those “fembots” ran until late 2015.