Legal

Coffee Meets Bagel has been overshadowed by its more aggressive competitors (like Tinder), but lately has emerged as a serious, lasting contender in the dating app space. The company is showing its app has real growth potential by securing $7.8 million in a Series A financing round led by existing investor DCM Ventures. Quest Ventures and Azure Capital also participated in the round.

This round of financing is followed by the steadily growing success of an app whose founders like to take things slowly, testing what works in each market (starting with its launch in 2012 to New York and Boston markets) before moving on to the next. Recently, the company expanded from an iPhone-only app to include an Android app as well, opening markets further.

Coffee Meets Bagel sets itself apart by making the dating app experience feel more personal. People are connected through their social networks – through mutual friends on Facebook, for instance – so there is a level of assurance that you can avoid the scammers and fake profiles. Also, CMB users receive only one match per day, avoiding the whole Tinder hook-up potential. Each day, users have 24 hours to message their match, and then a week to set up a date before they vanish into the ethers. The point is to keep the conversation going, instead of just letting messages and matches accumulate while users see who else is out there.

While the design is game-like (you can get “coffee beans” by providing information or referring friends to the service, which in turn can be used to access additional features, like the ability to see who your mutual friends are, or to rekindle the flame with a match you neglected to message in time.) The company also teamed up in certain cities with local businesses to offer discounts to places you could go for a first date, although the growth of the app nation-wide has prevented them from doing this in more than a few major cities.

The additional funding will pay for engineers and developers to help build the core business so it can handle the projected growth in users. While the company hasn’t publicly shared their subscriber figures lately, the interest from investors is telling.

CMB has been compared to dating app Hinge and Are You Interested, which also focus on matches based on mutual social media connections.

The additional financing follows the company’s earlier participation in the TV series “Shark Tank,” where the founders proposed their business plans to celebrity investors in the hopes of gaining additional funding. While they didn’t get it from the TV show’s panel of judges, they have been successful in raising the funds elsewhere.

Just as Tinder’s founder Sean Rad was at the top of his game, enjoying the enormous success of his dating app Tinder after two short years on the market - and about to announce the new features offered in the latest version of the app - the board has decided to take away his CEO title.

As reported originally in a cover story for Forbes Magazine, Rad has been demoted to President, his management power greatly reduced for a yet-to-be-determined CEO who will take the reins of Tinder from him. According to Forbes, IAC decided that the company needed a more seasoned CEO (“an Eric Schmidt-like person”) leading it and taking it to the next level of a viable, revenue-generating business, as opposed to the young and green entrepreneur who brought Tinder to its current success. And also, preferably not a CEO tainted with scandal.

When Rad first launched Tinder, he did so with a lot of help from his friend and social trendsetter Justin Mateen. By approaching social influencers at universities (such as fraternity leaders), Mateen managed to get a lot of people using the app quickly, so the user base only grew stronger with time and more than a little PR.

Mateen and Rad built up the company together, but the scandal started when Mateen started dating one of their employees. When that relationship went south, the employee decided to pursue a sexual harassment lawsuit based on angry and inappropriate texts she had received from Mateen, and sued the company. She reportedly walked away with a little over a million dollars, but Mateen and Rad seem to be paying a higher price. Rad was implicated because he was the one who stripped her of her VP title and later “wrongfully terminated” her, according to the lawsuit.

But will all this drama derail Tinder itself? Not likely. The company continues to grow, and the revenue plan for its new premium service – Tinder Plus – rolls out this month with two new features for paying customers. The basic Tinder app will remain free.

The new version includes a travel feature called Passport, which lets users journey around the globe, swiping through matches in various cities instead of having to choose one based on their GPS location. The second feature is something users have been requesting from the beginning – an “undo” button that lets them revisit profiles they’d already rejected. Everyone deserves a second chance, right?

The company plans to launch another feature in the near future called “Places,” which will allow users who frequent the same places to meet over the app.

Will Tinder maintain the enthusiasm of its investors and the public at large after Rad steps down? Will customers be willing to pay for the benefits of Tinder Plus? We’ll have to wait and see.

The operator of a dating site for people with sexually transmitted diseases is facing a $16.5m pay out after losing a privacy case.

The site in question in PositiveSingles, a dating service for singles around the world with herpes, HPV, HIV / AIDS, hepatitis, chlamydia, gonorrhea, syphilis and other STDs. Back in 2011, an unnamed claimant sued the parent company, SuccessfulMatch, as part of a class action case.

SuccessfulMatch offers an affiliate scheme for new dating services as well as running a number of niche dating sites of its own. It offers both software and databases that contain the details of "hundreds of thousands of profiles" registered to its existing services – and therein lies the problem.

In the 2011 lawsuit, the owner of PositiveSingles was accused of sharing pictures and profile information from the site with other dating services, despite promising privacy and confidentiality. It was revealed that PositiveSingles is one of more than a thousand different websites that all funnel members' personal information into a single database that does, in fact, share that information with third parties.

The plaintiff acknowledged that upon completion of the registration page, members' are given a link to the Terms of Service which state that profile details – including details about HIV and other STD statuses - may be shared with other sites in the SuccessfulMatch network. By posting a profile, he said, users agree to those terms.

But he also acknowledged that few users ever read the Terms of Service, because...well...who does?

A jury found PositiveSingles guilty of breaking local consumer laws, fraud, malice and oppression. The company is now faced with paying approximately $1.5 million in compensatory damages and $15 million in punitive damages. In a hearing on October 29, 2014, the court indicated that it will issue an injunction prohibiting the illegal conduct and declared that three provisions of the Terms of Service are unconscionable.

This story follows a previous lawsuit filed by two women who attempted to sue SuccessfulMatch on similar grounds earlier in the year. A judge dismissed their claims in April after, saying they had failed to specifically allege they had actually read the Terms of Service they claimed were misleading. Despite the judge's dismissal, the women filed an amended claim and the case is still active.

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.

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.

According to Bloomberg News, the popular dating website Zoosk is scheduled to go public. The company filed earlier this year, but the latest stock market volatility might delay their offering until 2015.

Zoosk has long touted itself as a major contender in the online dating game due to its large international user base, alongside brands such as Match.com and OkCupid. The company has more than 27 million members across 80 countries, and the online dating market is reported to be worth $1.4 billion.

The appeal to investors goes beyond the revenues to be had in the online dating market. Zoosk company executives are betting on their extensive user base and tracking technology to help leverage their value. Unlike many online dating websites that rely on lengthy questionnaires and profile descriptions, Zoosk’s technology is purely behavior-based. That is, when users of the site navigate through profiles, send messages, or set filters to view other members, Zoosk is tracking this data and responding by providing matches that have similar behavior or seem most compatible. In other words, they are honing in to what users really want by seeing what they actually do online.

The more a user interacts with other members in the Zoosk community, the more Zoosk learns about that person to give them better matches. To the company’s benefit, it also gives them a wealth of data about their users, which is a valuable asset for investors.

Zoosk is also integrated so users can log in no matter what platform they are viewing on – phone, laptop, iPad or tablet, and is the #1 grossing online dating app in the iTunes store, according to its website. But its marketing expenses might be cutting into its revenue.

Website SeekingAlpha.com has been speculating about the opening price the company will decide upon, based on current statistics. Zoosk’s options granted in April 2014 had an exercise price of $7.72, so SeekingAlpha.com assumes the pricing discussions are in the range of $8-$16, which might not be an incentive for investors looking for a deal (and also looking at how the company can bring in more revenue). Right now, the dating app is free, but members pay to use features like messaging, chatting, and connecting with viewers who have viewed their profiles.

The opening price of the company’s stock is a matter of concern, but what does it mean to go public during such a risky market?

“Nobody wishes they went public today or over the last week,” Max Wolff, the chief economist at Manhattan Venture Partners, an investment firm focusing on late-stage private technology companies, told Bloomberg. “A regular bout of intense selling, like we’re seeing now, makes people feel like it’s smart to stay private longer.”

So the next move is up to Zoosk, but the company anticipates that investors are willing to bet on it.

Please read our Zoosk review for more information on this service.