The Federal Trade Commission announced Wednesday that it’s suing Match Group, the parent company of leading online dating sites such as Match.com, OKCupid, and Tinder, for allegedly using fake accounts to get more people to sign up for paid subscriptions.
Match Group shares fell about 7% following the announcement. They have now recovered to a drop of about 2%.
The FTC complaint accuses Match Group of knowingly using “deceptive or unfair practices to induce consumers to subscribe to Match.com and to keep them subscribed.” The lawsuit details how Match.com users were messaged by fraudulent accounts. The company then allegedly led consumers to believe that the communications were from real romantic interests, using the overtures to encourage the customer to pay for a subscription. The FTC said that hundreds of thousands of people subscribed to Match.com after receiving communications from fake profiles.
The complaint comes just months after Match Group launched an advertising campaign focused on Match.com’s fight against fake accounts. In the 45-second video advertisement, the company positions Match.com as a more trustworthy site than other online dating sites, using the tag line “Start something real.”
In a statement, Match Group dismissed the FTC accusations as “completely meritless” and says the allegations are supported by “consciously misleading figures.”
“Fraud isn’t good for business,” a Match Group spokesperson said. “We catch and neutralize 85% of potentially improper accounts in the first four hours, typically before they are even active on the site, and 96% of improper accounts within a day.”
Match Group is currently the market leader in the online dating industry. It controls approximately 25% of the online dating market, according to the FTC, which is more than twice its nearest competitor. The company’s stock dropped more than 7% following the announcement of Facebook Dating earlier this month.