The U.S. Department of Justice, in a move signaling heightened scrutiny on digital practices aimed at young audiences, has stepped into the fray with a lawsuit against Iconic Hearts Holdings Inc. and its CEO Hunter Rice. The charges revolve around claims of deceptive operations through their social media messaging app, Sendit. The app, popular among a younger demographic, has been accused of sending anonymous romantic and sexual messages, directing them to believe they were from actual acquaintances. This has been outlined in a complaint filed in the U.S. District Court for the Central District of California.
According to an announcement made on September 30 by the Justice Department, the charges brought forward include violations of the FTC Act, the Restore Online Shoppers’ Confidence Act (ROSCA), and the Children’s Online Privacy Protection Act (COPPA). It is alleged by the Justice Department that the Defendants have collected tens of millions of dollars in revenue through the purchase of their "Diamond Membership." The membership purportedly allowed users to unmask the identities behind the anonymous messages, which were in fact being sent from the Sendit app.
The deceptive nature of these practices, according to Assistant Attorney General Brett A. Shumate, was not only unfair but also targeted a vulnerable audience. “The Department of Justice is committed to preventing companies from using unfair and misleading business practices to profit off of American children,” Shumate stated. This commitment by Shumate has been echoed as they, alongside the FT,C aspire to enforce federal consumer protection laws vigorously.
The lawsuit further alleges that Hunter Rice and his company violated COPPA by harvesting personal information from users under the age of 13 without obtaining parental consent or providing due notice. Also glaring are the ROSCA violations, cited as failures to clearly disclose the terms of the Diamond Memberships, which invisibly harvested $9.99 per week from its subscribers, a week costing as much as $9.99. The end goal of the lawsuit is to secure civil penalties, restitution for consumers, and an injunction against the continuation of these practices.
On the legal front, the United States is represented by a team spearheaded by Trial Attorney Marcus P. Smith and Assistant Director Zachary A. Dietert of the Civil Division’s Consumer Protection Branch, with ample support from FTC representatives Siobhan C. Amin, Miles D. Freeman, and John D. Jacobs. The interest of consumers, particularly the youth ensnared by the app's alleged schemes, lies at the heart of this action. For more details on the actions of the Consumer Protection Branch, the public can visit their website.
The allegations made by the government are, as of now, merely that—allegations. These await the rigors of legal scrutiny, as to proceed to trial, the burden is upon the government to establish the veracity of the claims by a preponderance of the evidence. Meanwhile, the conversation about the responsibility of tech companies towards their younger users continues to stir public consciousness and legal debate.
