Ashley Madison Hit By A $1.3 Million Class Action in Israel, Alleging Fraud, “Blackmail”

AVID dba Ashley Madison sued in a $1.4 million class action suit in Israel

Ever since the Ashley Madison hack in July, its parent Avid has been hit with class action lawsuits in Canada and some U.S. states. Now we learn that a $1.3M class action has been filed against it in Israel. Filed just before the hack, it alleges blackmail-style fraud and deception. Here’s what it could mean to Avid’s future. [exclusive]

Gina-Smith-anewdomainaNewDomain — You can add a new class action suit to the growing list of Ashley Madison class actions hitting courts this year. This one is a $1.3 million class action in Israel, filed shortly after Avid launched the Hebrew version of AshleyMadison.com in May.

This class action is different from the other Canada and U.S. suits that have been bubbling up since the hack. It could possibly influence other countries where AshleyMadison.com does business to file similar complaints, our legal analysts said. Also, this class action has teeth, our legal analysts told us. And it was filed before the hack.

The Israeli class action, readable in full in English and in Hebrew below the fold, attacks the very heart of Avid’s “adultery dating” business model, as you’ll see. Mainly, it alleges Avid was fraudulent and deceitful when it told Israeli users that AshleyMadison.com membership was free and secure.

Tel Aviv attorney Amira Tapiro, who filed the suit, spoke to aNewDomain about the case this week, the first time news of the class action has reached anyone outside Avid.

“I think I can win this one,” said Tapiro, a founding partner at Tel Aviv’s Goren Tapiro, and a lawyer who colleagues describe as being aggressive and having a real appetite for bloody class action fights.

ashley madison class action suit in israel praecellens avidIn Israel, there are some principals that are above any and I (will win) if I an prove that they were breached. You know,” he added, “when I first got the case my first instinct was that Avid (was doing) some kind of ‘blackmail.’ You sign up for the website — for free — you put in all your details — for free — and only then (will) you understand that you can’t unregister without paying $19 (US) for the ‘paid delete’ charge.” And then, he added, you may be too embarrassed to complain due to the ‘adultery’ nature of the site.”

Made on behalf of Eyal Israel, an Israeli man who signed up for the site after its May 20, 2015 Hebrew-language launch, the complaint has more than 25 causes of action.

The first one is that AshleyMadison.com claims to be free. The complaint alleges that:

… in the advertisements it portrays to Internet users, (Avid) represents clearly and explicitly that ‘signing up is free’ … and that the site is secret and discreet (100 percent discreet services) .. when in practice, (Avid) imposes on its customers who wish to remove their profile an exit fine in the amount of NIS 69 ($19 US).”

It continues:

“And, in telling users after they have signed up for the ‘free’ Ashley Madison service that they must pay to delete their personal details, Avid … in a roundabout way, and in a consistent, one-sided and systematic manner, compels its customers to pay for the removal of their profile, without the customer being aware, when signing up to the site, of this requirement for payment … and in practice (this) is rudely and blatantly dipping its hand into its customers’ pockets while they are, basically, a ‘captive audience.'” 

It continues, saying:

“(Avid’s conduct) not only amounts to a blatant and fundamental breach of the provisions of the law … while deceiving the consumers when registering on the site. Moreover, this conduct of the respondent even amounts to (in the Applicant’s opinion) cynical and blatant abuse (not to say extortion) of the customer who registers on such a site, (which) promises, at registration, ‘100 % discreet services.’ “

Here’s how it calculated that $1.3 million in damages number, according to the complaint:

By way of estimate, and with a very cautious and conservative assessment, the (class action) calculated that the affected (members) amounts to 40,000 members (less than 4 percent of the overall one million visitors, per Avid claims) … and less than one fifth of all members on the site (90,000 per Avid claims) … therefore the (suit) assesses the total sum of NIS 2,760,000 (NIS 69  x 40,000).”

However, leaked emails reveal that Ashley Madison PR greatly exaggerated the size of this launch. Scroll below the fold for an internal report to show the more modest user numbers execs quote as visiting and signing up to the Ashley Madison Hebrew site in May.

The big threat here to Avid, our legal analysts tell us, isn’t so much the Israeli class action alone, but the risk that other countries may follow suit, which could add up, considering AshleyMadison.com is in 25 countries.

Ironically, it could well be that the financials and customer lists revealed in the Ashley Madison hack in late July could help Avid avoid the brunt of that risk. After all, its internal sales and marketing reports indicate far more modest numbers around customers and financials. And, potentially, because the customer lists are now out and Avid had to introduce a free data delete policy after the hack, some of the sting has been taken out of the “extortion” and deceptive business practice claims in suits like this.

“The hacking (does) fix all of most of the things that we filed against,” Tapiro told me after briefing me on the Israeli class action this week.
Stay tuned …

Here’s a copy of the complaint detailing the $1.3 million Israeli class action suit that Avid now faces.

E. Israel $1.3 Million Israel Class Action Against Ashley Madison

Here’s a copy of the media plan to guarantee the maximum buzz for the Ashley Madison launch in Israel.

Ashley Madison Israel Launch PR Agreement with Steinreich (April)

Here’s a document Avid Life Media had to put together for a court case it was involved in early last year. It shows all Avid’s shell companies and their various responsibilities. Praecellens, Ltd, in Cyprus, is the money making and spending heart of the company, docs allege. It’s a named party in the Israeli class action.

Avid Life Media: Corporate Chart, All Shells by Gina Smith

Here’s a copy of the complaint the Israeli advocate sent me in Hebrew.

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The $1.3 million size of this Israeli action is justified, Tapiro told me, due to the huge scale of the AshleyMadison.com launch in Israel in May.

This Avid Report Shows Israel Launch was nowhere near as big as PR claimed.

About the author

Gina Smith

Gina Smith is a New York Times bestselling author and an award-winning journalist. A former correspondent for ABC News, Gina is the co-founder and editorial director of aNewDomain Media. Email Gina at gina@anewdomain.net and find her on Twitter @ginasmith888