FTC Investigation Leads to Lawsuit Alleging Sendit App and its CEO Unlawfully Collected Personal Data from Children, Deceived Users About Messages, Subscription Memberships

The Federal Trade Commission is taking action against the operator of the Sendit anonymous messaging app for unlawfully collecting personal data from children, misleading users by sending messages from fake "people," and tricking consumers into purchasing paid subscriptions by falsely promising to reveal the senders of anonymous messages.

A complaint, 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 websites, apps and other online services that have knowledge they are collecting personal information from children under 13 to notify parents about what personal information the sites or apps collect and obtain verifiable parental consent before collecting such information. The complaint also alleged that Iconic Hearts made misrepresentations to users to push them to purchase premium subscriptions, unfairly used fake messages to trick child and teen users into purchasing premium subscriptions and failed to clearly disclose the terms 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," said 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 complaint alleged that Iconic Hearts knew that numerous Sendit users were under the age of 13 but failed to comply with the COPPA Rule. For example, in 2022, more than 116,000 users reported their age as under 13 while using Sendit, according to the complaint. Iconic Hearts also received complaints from parents who indicated that their children were under 13. Even though it was aware that many users were under 13, Iconic Hearts failed to notify parents that it collected personal information from children, including their phone numbers, birthdates, photos and usernames for Snapchat, Instagram, TikTok and other accounts, and did not obtain parents' verifiable consent to such data collection.

The complaint also alleged that Iconic Hearts and Rice deceived Sendit's users, many of whom were children and teens, into purchasing its premium "Diamond Membership" using methods such as:

• Misrepresenting that when users received anonymized Sendit messages, those messages came from users' friends and social media contacts-when, in fact, many messages were fake and generated by Iconic Hearts;
• Sending fake messages that were often provocative and sexual in nature-such as "have you done drugs" or "would you ever get with me?"-and then encouraging users to buy its Diamond Membership to reveal who sent the message;
• Misrepresenting that users would find out the identity of message senders if they purchased a Diamond Membership-when, in reality, users received either false information (if the message was fake) or generic information like location or phone type (if the message was from a real person); and
• Failing to clearly disclose to Diamond Membership purchasers that they would automatically be billed as much as $9.99 every week, rather than paying a one-time fee to see who sent a particular 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 certain unfair or deceptive internet sales practices with a negative option feature.

The Commission vote to refer the complaint to the Department of Justice for filing was 3-0. The Department of Justice filed the complaint upon referral from the Commission in the U.S. District Courtfor the Central District of California.

NOTE: The Commission refers a complaint to the DOJ for filing when it has "reason to believe" that the named defendants are violating or are about to violate the law and that a proceeding is in the public interest. The case will be decided by the court.

The lead attorneys on this matter are Siobhan Amin, Miles Freeman, and John Jacobs in the FTC's Western Region Los Angeles office.