Infidelity website Ashley Madison facing FTC probe, CEO apologizes

Tue Jul 5, 2016 4:01pm EDT
 
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By Alastair Sharp and Allison Martell

TORONTO (Reuters) - The parent company of infidelity dating site Ashley Madison, hit by a devastating hack last year, is now the target of a U.S. Federal Trade Commission investigation, the new executives seeking to revive its credibility told Reuters.

The breach, which exposed the personal details of millions who signed up for the site with the slogan "Life is short. Have an affair," cost Avid Life Media more than a quarter of its revenue, Chief Executive Rob Segal and President James Millership revealed in an interview, the first by any senior executive since the incident.

"We are profoundly sorry," said Segal, adding that more could perhaps have been spent on security.

The two executives, hired in April, said the closely held company is spending millions to improve security and looking at payment options that offer more privacy.

But it faces a mountain of problems, including U.S. and Canadian class action lawsuits filed on behalf of customers whose personal information was posted online, and allegations that it used fake profiles to manipulate some customers. The site's male-to-female user ratio is five to one, the executives said.

An Ernst & Young report commissioned by Avid and shared with Reuters confirmed that Avid used computer programs, dubbed fembots, that impersonated real women, striking up conversations with paying male customers.

Avid shut down the fake profiles in the United States, Canada and Australia in 2014 and by late 2015 in the rest of the world, but some U.S. users had message exchanges with foreign fembots until late in 2015, according to the report.

Another site, JDI Dating, paid $616,165 in redress for similar practices in an October 2014 settlement with the FTC.   Continued...

 
Online dating agency Ashley Madison's CEO Rob Segal (R) and president James Millership pose during an interview in Toronto, Ontario, Canada June 28, 2016. Picture taken June 28, 2016.  REUTERS/Chris Helgren