Ashley Madison Owner Settles FTC Investigation With Reduced $1.7m Fine

Ashley Madison rebrand

The owner of Ashley Madison has paid a $1.7m settlement after an investigation by the FTC.

The fine is a discounted penalty that will end the FTC and State Attorneys-General investigation into the Toronto company’s security procedures and consumer practices.

Plaintiffs in the case had originally sought $17.5m, but the remaining $15m has been suspended because of ruby’s apparent inability to pay.

Speaking about the $1.7m settlement, FTC chairwoman Edith Ramirez told reporters: “I recognize that it was a far lower number frankly than I would have liked.

“We want them to feel the pain. We don’t want them to profit from unlawful conduct. At the same time, we are not going to seek to put a company out of business.”

Alongside the penalty, ruby – the rebranded Avid Life Media – will undergo a comprehensive information security program and agree to “refrain from past business practices” that “may have allegedly been misleading to consumers.”

Both settlements also “expressly state” that ruby neither admits nor denies the allegations made by the FTC and the State Attorneys-General.

Because of the settlement, Ashley Madison customers will not receive financial redress for the breach, which occurred last year.

Despite this, class-action lawsuits against the company are pending.

Half the fine will be paid to the FTC, and half to the 13 states participating in the settlement.

New ruby CEO Rob Segal said: “Today is a pivotal day for our members and for Ashley Madison.

“Today’s settlement closes an important chapter on the company’s past and reinforces our commitment to operating with integrity and to building a new future for our members, our team and our company.

“Our team is making significant, long-term investments in our people, processes and systems to improve Ashley Madison for our members.”

Segal and ruby President James Millership took over the leadership of ruby in April, after the resignation of Ashley Madison founder and “king of infidelity” Noel Biderman.

Earlier this year, an independent investigation by the Australian and Canadian Privacy Commissioners was “highly critical” of Ashley Madison’s security systems and safety procedures.

The commissioners detailed a number of actions and improvements the Canadian company needed to take to address the security issues, and in response ALM offered binding commitments to improve its personal information practices and governance.

Read more about the investigation here.