FTC Alleges Sendit App and its CEO Unlawfully Collected Private Knowledge from Children, Deceived Customers About Messages, Subscription Memberships

The Federal Trade Commission is taking motion in opposition to the operator of the Sendit nameless messaging app for unlawfully amassing private knowledge from youngsters, deceptive customers by sending messages from faux “people,” and tricking customers into buying paid subscriptions by falsely promising to disclose the senders of nameless messages.

A criticism, filed by the Department of Justice upon notification and referral from the FTC, alleged that Sendit’s operator, Los Angeles-based Iconic Hearts Holdings, Inc., and its CEO, Hunter Rice, violated the Children’s Online Privacy Protection Rule (COPPA Rule). The Rule requires operators of internet sites, apps and different on-line providers which have information they’re amassing private data from youngsters below 13 to inform dad and mom about what private data the websites or apps accumulate and procure verifiable parental consent earlier than amassing such data. The criticism additionally alleged that Iconic Hearts made misrepresentations to customers to push them to buy premium subscriptions, unfairly used faux messages to trick youngster and teenage customers into buying premium subscriptions and failed to obviously disclose the phrases of its subscription plans.

“Sendit’s operator and CEO were well aware that many of its users were under the age of 13 and still failed to comply with COPPA,” mentioned Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “At the same time, they manipulated many users, including children, into signing up for their weekly subscription service by sending fake messages and promising to reveal the identity of message senders but failing to deliver.”

The criticism alleged that Iconic Hearts knew that quite a few Sendit customers had been below the age of 13 however didn’t adjust to the COPPA Rule. For instance, in 2022, greater than 116,000 customers reported their age as below 13 whereas utilizing Sendit, based on the criticism. Iconic Hearts additionally obtained complaints from dad and mom who indicated that their youngsters had been below 13. Even although it was conscious that many customers had been below 13, Iconic Hearts didn’t notify dad and mom that it collected private data from youngsters, together with their telephone numbers, birthdates, images and usernames for Snapchat, Instagram, TikTok and different accounts, and didn’t get hold of dad and mom’ verifiable consent to such knowledge assortment.

The criticism additionally alleged that Iconic Hearts and Rice deceived Sendit’s customers, lots of whom had been youngsters and youths, into buying its premium “Diamond Membership” utilizing strategies comparable to:

• Misrepresenting that when customers obtained anonymized Sendit messages, these messages got here from customers’ associates and social media contacts—when, the truth is, many messages had been faux and generated by Iconic Hearts;
• Sending faux messages that had been typically provocative and sexual in nature—comparable to “have you done drugs” or “would you ever get with me?”—after which encouraging customers to purchase its Diamond Membership to disclose who despatched the message;
• Misrepresenting that customers would discover out the identification of message senders in the event that they bought a Diamond Membership—when, in actuality, customers obtained both false data (if the message was faux) or generic data like location or telephone sort (if the message was from an actual particular person); and
• Failing to obviously confide in Diamond Membership purchasers that they might mechanically be billed as a lot as $9.99 each week, fairly than paying a one-time price to see who despatched a specific message.

In addition to the COPPA Rule, Iconic Hearts and Rice allegedly violated the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibits sure unfair or misleading web gross sales practices with a unfavorable possibility characteristic.

The Commission vote to refer the criticism to the Department of Justice for submitting was 3-0. The Department of Justice filed the criticism upon referral from the Commission within the U.S. District Court for the Central District of California.

NOTE: The Commission refers a criticism to the DOJ for submitting when it has “reason to believe” that the named defendants are violating or are about to violate the regulation and {that a} continuing is within the public curiosity. The case can be determined by the court docket.

The lead attorneys on this matter are Siobhan Amin, Miles Freeman, and John Jacobs within the FTC’s Western Region Los Angeles workplace.