Online Dating

The FTC has filed its first lawsuit against an online dating company, accusing UK-based JDI Dating of luring customers to pay money through fake profiles the company created.

A settlement between the FTC and JDI Dating prohibits the company from using fake profiles and requires it to refund more than $616,000 to customers. JDI operates 18 websites including cupidswand.com, flirtcrowd.com and findmelove.com.

According to a press release distributed by the FTC on the matter, JDI was tricking customers by offering them a free plan and allowing them to set up profiles and upload photos. Once customers completed this process, they began to receive messages supposedly from other users, but were unable to respond until they bought a paid membership. Membership for the sites ranged anywhere from $10 to $30 per month.

Unfortunately, the profiles that usually attracted paying customers were often virtually generated, so once new members were paying for their subscriptions, they weren't able to communicate with the matches they thought they were getting - because they never existed.

“JDI Dating used fake profiles to make people think they were hearing from real love interests and to trick them into upgrading to paid memberships,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.

The prevalence of fake profiles has long been an issue for online daters, but this new lawsuit is finally shedding some legal light on the problem. Because of this, more online dating companies will probably be re-thinking their freemium services (attracting users with free services and later asking them to pay for certain "privileges" on the site.) Freemium services are often based on how many members join the site - numbers are key in the online dating world, because high numbers attract more people. The more valuable a company's user database, the more likely people would be willing to pay for their matches, because they feel that they are getting more choices.

In addition to generating fake profiles, the FTC found that JDI was also misleading consumers about payments. The company did not inform customers that subscriptions would have recurring charges until the customer canceled the service (which was tricky to find on the site), so many people paid for the site after they stopped using it without realizing it.

Rich added, “Users were charged automatically to renew their subscriptions – often without their consent.”

Again, this is a common practice among online dating sites. Several do have recurring charges, and it's often difficult to figure out how and where on a site to fully cancel services and erase your profile. For example, free dating sites like Plenty of Fish have kept profiles of members who are no longer using the service without clearly explaining to customers how to fully delete them. Although they are not charging for their services, it could be misleading to other daters.

The FTC lawsuit is a positive step in helping companies in the online dating industry clean up their databases and be more honest with the services they provide. We'll see if other companies are named in the future.

Consumers aren't the only ones excited about iOS 8. Apple launched several new features with the operating system that expand the capabilities of third-party apps, and app developers are keen to take advantage of them.

Most excitingly, iOS 8 lets devs use the Touch ID fingerprint sensor included in the iPhone 5s and the new iPhone 6 models. This means apps that would ordinarily use the Passcode feature can now include the fingerprint sensor instead, bypassing the need for a traditional password once a user's account has been verified.

Developers have jumped on the new opportunity and, left and right, are updating their apps. Here's a round-up of some of the apps that have adopted Touch ID:

• LastPass: The popular password management app now uses Touch ID to secure a user's password vault.
• Amazon: Where would any of us be without Amazon.com making our lives 101% easier? And now that the Amazon iPhone app includes Touch ID, it's even easier than that.
• Mint: Users can now log in to this money management app with Touch ID rather than their password.
• Day One: An award-winning journaling app. Users can lock their journals with Touch ID instead of a passcode.
• Evernote: Evernote is a modern workspace that helps you be your most productive self. Now it makes your life even easier by allowing premium users to use Touch ID to secure their accounts.
• YPlan: What are you up to tonight? YPlan is an event discovery app designed to help you answer that question by discovering and booking the best events in your area. Touch ID is now used for purchase authorization.
• eHarmony: You didn't think I'd forget to include a dating app, did you? Say goodbye to the days of user logins... if eHarmony is your dating service of choice, you can now use Touch ID instead.

Let's here it for iOS 8. Logging in to many of your favorite accounts is now as easy as resting your finger on that shiny new Touch ID sensor. Not only does it make sign-ins easier and provide another layer of security, it does so in a way that keeps with the overall Apple aesthetic and ethos. If you use any of these mobile services, take advantage of the Touch ID improvements and update your apps ASAP.

There was a time when Plenty of Fish was squarely at the top of the online dating heap. Founder Markus Frind attributes the site's explosive success to a surprisingly simple formula: in 2003, when rival dating sites paywalled, POF kept things free. Instead of charging customers, POF relied entirely on advertising for revenue.

The model worked like a charm. Frind famously claimed he spent only an hour a day working, while POF blew past the competition to become one of the world's most popular dating sites.

These days, things aren't quite so simple. Five years ago POF had just 3 people on its payroll; today it has 80. No longer does Frind devote only an hour a day to work; now he works half-days. Revenue has grown alongside both of those changes, but not without challenges. Namely, the smartphone.

POF's iPhone and Android apps are incredible popular – second only to Tinder – but they aren't compatible with the revenue model that made the company a success in the first place. Advertising just doesn't work well on the smaller screens of mobile phones, and now POF is faced with a decision: evolve or go extinct.

Frind says that 90% of POF's visits from people under the age of 35 now come from phones rather than web browsers, so it's clear which option the company must choose. Most of its developers are now focused on improving the mobile apps, although Frind says up to 60% of the company's “tens of millions of EBITDA” still comes from the website.

POF's app revenue comes instead from upgraded memberships. Users can pay a monthly fee for extra features, like the ability to add more photos, but the new business model for monetization on mobile is still in its infancy. And while revenue overall is reaching an all-time high for the company, this year also marks the first time the number of people visiting the website is declining. According to web data firm Alexa, OkCupid has now caught up to POF on desktop in the free dating site market.

Can POF hold its own against a site backed by IAC? Mark Brooks, a consultant for the online dating industry, acknowledges that POF lacks the financial resources of IAC, but believes POF's mobile numbers are promising. What's left now is for POF to figure out how to make those mobile visitors as valuable as their desktop counterparts.

POF must now find ways to increase the number of users who upgrade to paid accounts. Exactly what those ways will be remains to be seen.

IAC has released third quarter 2014 results. Revenue for the quarter totaled $782.2 million, up from $756.9 million in Q3 2013.

In the third quarter of 2014, consolidated revenue for IAC increased 3% year-over-year driven by solid growth at The Match Group and strong growth at Vimeo and HomeAdvisor. The Match Group revenue increased 12%, driven by 9% growth in paid subscribers to its dating websites. They now number over 3.6 million globally. Contributions from The Princeton Review and FriendScout24 – acquired on August 1, 2014 and August 31, 2014, respectively – also played large roles in The Match Group's success in Q3 2014.

Several other important segments also ended in the green, making Consolidated Adjusted EBITDA the dark spot in an otherwise-bright quarter. Third quarter adjusted-EBITDA was $135 million, down 18% from the third quarter of 2013. However, it was down only 1% when excluding approximately $14 million in net gains related to asset sales and the impact of around $13 million of acquisition-related differed revenue write-downs for the Princeton Review, FriendScout 24, and Slimwear.

Sometimes, you want a little less judgment and a lot more acceptance when it comes to your rituals or habits – especially with the person you want to date. Dating websites like eHarmony might be great at matching people based on personality traits and long-term potential, but what if you like to relax in the evening with cocktails or some cannibas and are afraid your date just won’t get it?

This is where dating app My420Mate.com comes in. Instead of tiptoeing around the subject or hiding your habit, you can date other lovers of weed.

The new app – branding itself as a “lifestyle platform” - launched in spring, and the company is now working on its first major marketing campaign, which will include billboards in Los Angeles, San Diego, San Jose and Sacramento. My420Mate will also be debuting a new version in December.

Los Angeles marijuana entrepreneur Miguel Lozano teamed up with partner Jay Lindberg to launch the new app, noting a desire from users of traditional dating sites. Apparently in L.A., just as many daters were calling themselves “420-friendly” in their profiles as saying they liked long walks on the beach, according to local paper L.A. Weekly.

There are only 11,000 users to date, but there are also only a few states where it’s legal – including California, Colorado and Washington - and that’s where the app seems to be taking off.

Lozano is trying to steer clear of stereotyping users of his new app, although he does also see a marketing opportunity to group them together under their mutual appreciation of cannabis. “I was trying to change the stereotype of the average cannabis user," Lozano told L.A. Weekly. "Everyone uses the word stoner, but it's a lifestyle. There's a lot more to it than that. We have teachers, chefs, and computer techs who enjoy the benefits of marijuana."

Niche dating sites and apps aren’t new – many developers and companies have invested in sites that cater to a specific market – be it seniors, vegetarians, Republicans, or even cowboys/cowgirls. When people are looking for compatibility or even those who share a religious faith it’s easier to go to a specialty site than filtering people out from a large site like Tinder or OkCupid.

But will My420Mate take off as a dating app? It’s too soon to tell, and might be a little premature of its founders to bet on it being as popular as Tinder. Because of its illegal status in most states, people might want to avoid putting their profile on the site altogether.

At the end of 2012, dating site Hinge had recently launched and was overshadowed by the popularity of dating app Tinder. Unsure of how to proceed with less than $32,000 in the bank and only a few thousand users according to Business Insider, Hinge decided to bet big on the mobile platform.

"We made some business assumptions that turned out to be wrong," Hinge CEO and founder Justin McLeod told the news website. "We were like, 'This thing is running out of money, and we need to do something drastic."

In what seems to be a spur-of-the-moment business decision, McLeod and a couple of developers holed up for a few weeks and launched a mobile version of Hinge on February 7th of 2013. But the launch wasn't as smooth as expected - Apple at first rejected the app, which caused many sleepless night for McLeod and his company. They had planned a huge launch party in Washington DC where the app first launched, and until the morning of the launch party, there was no app available.

The launch party turned out to be a success, and more people signed up right after it than had signed up for the beta in all of 2012. It seemed Hinge struck a chord with users where Tinder left them feeling insecure - especially women. Hinge does not just match users based on location like Tinder does (which means a lot of random profiles get into the mix) - you only get matched through your circle of Facebook friends of friends, so everyone you meet on Hinge has some kind of link to your circle. This security has been particularly attractive to female dating app consumers.

McLeod is not about to sit still. He is grabbing a good portion of the dating app market share, and expects to compete heavily with Tinder for its core user base. But he's taking things one step at a time.

Instead of launching his app nationally, he has launched city by city, building up a solid user base based on demand before he moves into a new market. Also, potential Hinge users must be invited by current Hinge users - adding a level of exclusivity and security to the app.

Hinge is now one of New York's hottest startups. Although Tinder is much larger (it makes more matches per day than Hinge has in its entire history), McLeod's company is starting to steal some Tinder users. It has expanded to 20 cities including Los Angeles, San Francisco and Washington, D.C. It uses a waitlist to assess demand in other cities, then launches when a few thousand people have signed up.

"There is no shortage of companies that have tried to build what we've built," McLeod says to Business Insider. "But we're using the organic, city-by-city method, which I think is the biggest thing ... We're a utility to help users meet great people in the flesh as effectively as possible ...We want to be a house party that has a really good host."