The Department of Justice, together with the Federal Trade Commission, announces the filing of a civil lawsuit in the U.S. District Court for the Central District of California against Iconic Hearts Holdings Inc. and its founder and CEO Hunter Rice for violations of the FTC Act, the Restore Online Shoppers’ Confidence Act, and the Children’s Online Privacy Protection Act and its implementing regulations in connection with the social media messaging app known as Sendit.
“The Department of Justice is committed to preventing companies from using unfair and misleading business practices to profit off of American children,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “We will continue to work with the FTC to enforce federal consumer protection laws to protect young people from such conduct.”
In a complaint filed in the U.S. District Court for the Central District of California, the United States alleges that defendants generated and sent millions of anonymous and often provocative, romantic, or sexual messages to users of the Sendit app, many of whom are children or teenagers.
As alleged, defendants, in violation of the FTC Act’s prohibition on unfair and deceptive business practices, falsely led users to believe the messages were from their social media contacts rather than the Sendit app itself, and that purchasing a “Diamond Membership” would reveal the senders’ identities.
The complaint also alleged that defendants violate COPPA by collecting personal information from app users who are children under the age of 13 while failing to provide notice to their parents or obtain verifiable parental consent.
Additionally, as alleged, defendants violate ROSCA by failing to clearly and conspicuously disclose the material terms of their Diamond Memberships, which automatically renew and cost as much as $9.99 per week.
Defendants allegedly generated tens of millions of dollars in revenue from Diamond Membership purchases. The complaint seeks civil penalties, restitution for consumers, and injunctive relief.
