Legal

Perhaps the rise of free Internet porn has come at a cost to some large companies. FriendFinder Networks Inc. (FFNTQ), publisher of Penthouse Magazine and a number of adult entertainment websites, has filed for Chapter 11 bankruptcy.

FriendFinder said that it has struck a deal with debt holders to reduce its debt by $300 million if accepted by the U.S. Bankruptcy court in Delaware. One note holder will get ownership of the sex entertainment business if the plan goes through.

The company built its network by buying and starting up social media, dating, and sex sites such as adultfriendfinder.com (for casual relationships), Amigos.com for Latin dating, and BigChurch.com (aimed at those more spiritual). Together the FriendFinder network includes 8,000 websites with 220 million members and 750,000 subscribers. But they haven't turned a profit since 2008.

FriendFinder Networks was originally formed in 2003 when founders Marc Bell and Daniel Staton purchased the publisher of Penthouse from bankruptcy. A year later they'd planned to launch an initial public offering with $460 million, but when the IPO was completed in 2011, they'd only managed to raise $46 million.

The company had also tried to purchase Playboy Enterprises in 2010, but the deal fell through.

The founders primarily blame the financial problems on the $400 million acquisition of Various, a network of dating sites that didn't generate the revenue expected, and the fact that credit card companies wouldn't process payments from sex website members. Others are looking at the bigger picture of the industry itself.

The question that perhaps the company's founders hadn't planned on was: who needs to pay a monthly fee to look for sex and porn when the Internet (and mobile apps) are rife with free options?

The question of the growing popularity of the mobile platform is one to consider as well. Dating app Tinder has exploded, and FriendFinder was rapidly trying to move its business into the mobile space since roughly 80% of its traffic was migrating from the desktop.

And what about Penthouse? Its flagship business has expanded into European broadcasting, a video business and does licensing deals as well, but surprisingly, the print edition of the magazine is still available even though it's struggling.

FriendFinder isn't the only casualty in the wake of free Internet porn. Earlier this year, LodgeNet Interactive, which provided adult films and video games to hotel guests, filed for bankruptcy, partly due to Internet competition.

If I'm going to be arrested for committing a federal crime, I at least want it to be a federal crime I knew I was committing. Preferably something really badass, like a complicated art heist from a major museum.

What I don't want to go to jail for is my online dating profile, because when all the other prisoners talked about the crazy crimes they got locked up for, there's no way I could say "online dating."

All joking aside, apparently there's an actual chance that you could be committing a federal crime by - wait for it - lying on your online dating profile. Which means basically everyone is now a criminal. Here's what's going down...

In a move that will probably surprise no one, Facebook proposed updates to its Data Use Policy and Statement of Rights and Responsibilities for the millionth time.

In another move that will probably surprise no one, most users probably aren't even aware of Facebook's proposed changes.

And in a move that might actually surprise a few of you, Facebook allowed users to comment on the proposed changes and, after the commenting period closed, decided to delay the update as it deals with criticisms from privacy groups.

What? Facebook is being thoughtful, acting concerned about privacy, and taking others' feelings into account? Who are you and what have you done with Facebook?

Seriously, though, it's awesome that Facebook maybe cares a little bit about what its users actually think. Their announcement of the updates said that both the Data Use Policy and Statement of Rights and Responsibilities would receive new language that clarifies:

• How advertising works on Facebook
• What to expect when it comes to using your name, profile picture, content and personal info with ads or commercial content
• How to control or remove apps you've used
• What data you're sharing with mobile devices

The proposed updates were met with resistance from privacy groups, who asked the FTC to prevent Facebook from enacting the changes over concerns about how the social networking site handles user information for advertising. According to these groups, the new policy makes it easier for Facebook to use the data of its members for advertising without their consent.

"The Federal Trade Commission must act now to protect the interests of Facebook users," said a letter sent to the FTC and signed by officials from six groups, including the Electronic Privacy Information Center. "The right of a person to control the use of their image for commercial purposes is the cornerstone of modern privacy law."

The proposed new Data Use Policy states that Facebook will use the personal information supplied by users to provide more relevant advertisements. Unlike the previous Data Use Policy, which says "We do not share any of your information with advertisers (unless, of course, you give us permission)," the new policy says nothing about permission ("...we may use all the information we receive about you to serve ads that are more relevant to you."). It's a small change in language that means an awful lot.

Privacy groups now fear that actively giving permission is a thing of the past and that by using Facebook, your permission is automatically assumed. The real issue here is that companies like Facebook need to communicate in simple, plain language about how they handle users' data. Until that transparency is achieved, we have a long way to go.

2013 didn't start out well for Cupid plc, the top-5 global online dating company that's responsible for a network of dating sites including Cupid.com. Cupid came under fire for allegedly using fake profiles to boost its membership, after the BBC claimed that members of Cupid's online dating services suspected fake "flirtatious" messages were being used to encourage free users to sign up for paid subscriptions.

Cupid plc denied using fakes and said it was cleared of the allegations by auditors. According to Cupid, the auditors found "no evidence of a company organised practice of staff enticing registered members to subscribe through the use of fake profiles."

The experiences of members and undercover investigators suggest otherwise, and users are still (rightfully) suspicious, but some good news has finally come out of the Cupid camp.

Cupid recently launched 'safe mode' functionality for its network of dating sites. The update still allows users to choose who they want to interact with, but provides the added security of being able to filter out members who choose not to verify themselves on the site. With 'safe mode' on, you can contact any user but will only receive communications from members who have undergone the verification process. Unverified users are welcome to continue using the site, but are encouraged to become "Trusted Members" to unlock access to people already using 'safe mode.'

For some reason, at this point, 'safe mode' is only available for male users and only female members are asked to become verified. Cupid hopes that the new technology will create a "smoother" and "more positive" online experience for its users and...well...I certainly can't blame them for hoping. Cupid needs any boost it can get at this point.

"We have listened to our customers and to dating website users in general," says Sean Wood, Communications Director at Cupid plc. "The main goal here is to give our customers choice to decide who they communicate with. This means they can choose verified users only or indeed if they feel comfortable with communicating more widely, then they have that ability too. Our members can use the sites secure in the knowledge that they are in a safe environment where they can get on with enjoying the experience, making contacts and meeting up."

Right. So...Cupid customers are safe from each other, but the real question is: are they safe from Cupid itself?

Facebook and Google probably know more about you than some of your friends do.

We're all guilty of it. In this age of oversharing, we live in public. Every detail of every day is shared with friends, family, fans, and followers with little regard for privacy or potential future repercussions. We assume that the sites we choose to reveal that information to keep our data safe and confidential. It's just blind trust, and sometimes our trust isn't rewarded.

Case in point: Successful Match, which has allegedly posted the HIV and STI statuses of its customers on affiliate dating sites without their knowledge. Successful Match is now facing a class action lawsuit claiming the conglomerate broke the law and its promises of confidentiality to customers on PositiveSingles.com. Positive Singles shared users' HIV and STI statuses with 'thousands' of spinoff sites, alleges the suit, including HIVGayMen.com, STDHookup.com and Blackpoz.com.

The two female plaintiffs say they were promised "fully anonymous profiles" in a service that would connect them with other singles with the same status when they joined Positive Singles. "What it does not do, however, is disclose that there are upwards of a thousand other websites that link to PositiveSingles.com," all of which use the same database of profiles, the women say in the suit.

The suit also alleges that Successful Match created all its websites with identical formats, despite promising that each website was "unique" and "exclusive." The plaintiffs say the websites' forms were intentionally designed to prevent the majority of members from ever seeing the Terms of Service. The Terms of Service could not be printed, and instead could only be obtained by personally contacting SuccessfulMatch.com to request a copy.

The provisions in the Terms of Service gave Successful Match.com the right to share all user profiles created on PositiveSingles.com. They also granted Successful Match the rights to all information entered in the site and gave the conglomerate permission to share the profiles.

The Positive Singles homepage now includes a disclaimer, but it's unclear when the disclaimer was posted:

PositiveSingles is part of a network of affiliated sites serving persons who are STD positive. Please see our Privacy Policy for details of how user profiles are accessible to others in the network.

Currently, the lawsuit seeks class certification, restitution, declaratory judgment, a permanent injunction against the defendant's business plan and collection of fees, and compensatory and punitive damages.

As if we don't hear enough about the perils of online dating already, this is the latest news about the potential dangers of looking for love online: your online dating site doesn't have to tell you that your date might be a murderer.

Eric Goldman, a Forbes contributor who also teaches Internet Law at Santa Clara University in California, cautions daters in a recent article on Forbes.com. He begins with the story of Mary Kay Beckman, who met a man named Wade Mitchell Ridley on Match.com in 2011. After dating briefly, Beckman broke it off.

Three months later, Ridley attacked Beckman in her home, repeatedly stabbing and kicking her. Later, it was revealed that Ridley already faced a murder charge in Arizona, where he was suspected of killing an ex-girlfriend with a butcher knife. Authorities also believe he robbed a pharmacy of painkillers earlier in the day. He was sentenced to 28-70 years in prison, where he died in May 2012.

Beckman survived the attack, and believes Match.com should take responsibility for the tragedy. She sued the dating site, but her suit was eventually dismissed.

Goldman thinks the outlook is bleak for suits like Beckman's. "Lawsuits against online dating sites tend to generate widespread press coverage going into detail about the victimization," he writes, "as stories like Beckman's prey on common fears about online dating." But although they generate outpourings of sympathy, they have historically been completely ineffective.

Beckman's suit was doomed from the start, says Goldman, because of a law that says websites aren't liable for user content. Plaintiffs have argued that they aren't suing dating sites over posts, but rather for failing to provide protection from dangerous users, but to date they've had zero success.

A similar case ruled that "all of Match.com's conduct must trace back to the publication of third-party user content or profiles. Match.com is a website that publishes dating profiles. There is nothing for Match.com to negligently misrepresent or negligently fail to warn about other than what a user of the website may find on another user's profile on the website."

Plaintiffs will no doubt continue their attempts to hold dating sites accountable for the actions of their members, and get increasingly creative in doing so, but Goldman believes their efforts are unlikely to be fruitful. "I've never seen a successful 'failure to warn' argument make any progress in working around" the law, he notes.

The best hope is that the websites will care enough about their reputation to voluntarily take measures to protect their members from harm.