Dating Site Operator to Pay Restitution, Fine for Auto Renewals

Dating Site Operator to Pay Restitution, Fine for Auto Renewals

SANTA MONICA, Calif. — Spark Networks USA, the parent company of niche dating sites Jdate.com and ChristianMingle.com, can now be added to a growing list of dating website operators that have been probed, prosecuted and punished for unfair or deceptive acts.

Los Angeles-based Spark Networks recently agreed to pay $500,000 in penalties and up to $985,000 in restitution to customers whose subscriptions automatically renewed or who were denied refunds when requested.

In a final court judgment signed by a Los Angeles County Superior Court judge earlier this month, Spark Networks also agreed to change its website and sales practices after being sued by the Santa Monica city attorney and district attorneys in San Diego, Los Angeles, Santa Clara and Santa Cruz counties.

Industry attorney Corey D. Silverstein of Silverstein Legal told XBIZ that the judgment sends a message to all website operators — that California authorities won’t hesitate to use their resources to go after businesses that are doing harm to consumers.

“The State of California is taking the lead once again, reminding website operators that government is no longer tolerating billing practices (most notably automatic renewal billing) that aren’t fully transparent and require express consent by consumers,” Silverstein said.

“The Federal Trade Commission has been especially aggressive in pursuing and prosecuting website operators for violations of the Restore Online Shopper’s Confidence Act (ROSCA) and ‘unfair or deceptive acts or practices in or affecting commerce,’” Silverstein said. “Dating websites in particular have been prime targets and Spark Networks can now be added to a growing list of dating websites that have been investigated, prosecuted and ultimately punished.

“At this point, it would be crazy for any website operator to engage in business practices that aren’t fully compliant with ROSCA and the growing number of state consumer protection laws that are now more than ever being aggressively enforced,” Silverstein said.

“If you are running an online business and aren’t sure if you are necessarily compliant, then now would be the time to have a proper legal review.”

The Spark Networks judgment requires all of its dating websites to clearly and conspicuously disclose renewal terms and obtain consumers’ consent through a separate check box or similar mechanism that does not include other terms and conditions.

Spark Networks also must send a summary of its renewal terms to consumers after they pay, and the Los Angeles company must allow consumers to cancel easily. Federal and state law requires businesses to make auto-renewals clear to consumers and to get “express, affirmative consent” before funds are collected.

California consumers who paid certain membership fees between May 26, 2012, and Oct. 10, 2017, would be able to seek reimbursement if they were charged for at least one automatically renewed cycle without their knowledge and consent.

Consumers who previously requested cancellation of an automatic renewal or continuous service plan and were denied were also eligible for restitution.

Each eligible recipient would receive a restitution check for $25 unless the total restitution claimed would exceed $985,000. If that occurs, the recipient amount would be lowered, according to terms of the settlement.

“Nobody should be surprised by this story,” Silverstein said. "And Spark Networks should be counting their blessings because this could have ended far worse for the publicly traded company whose market cap is $139.8 million and whose revenue in 2017 was just shy of $86 million.

"$500,000 in penalties and up to $985,000 in potential restitution will be considered by many as nothing more than a slap on the wrist," he said. "However, if you put aside the financial fines, all website operators are being sent a message by the State of California that the state will not hesitate to use their resources to go after businesses that are doing harm to California consumers.”