No stranger to controversy, Toronto-based dating Web site Ashley Madison is in the news again – this time it’s being called out by a competing online dating service.
AshleyMadison.com, owned by Avid Life Media, is an online dating Web site that targets married people. The site’s slogan, “life is short, have an affair,” and media publicity photos of CEO Noel Biderman putting his finger to his lips at a corporate power table say it all.
Ashley Madison CEO Noel Biderman says his site doesn’t deal in adult content.
Ashley Madison is being pointed at by competitor Brandon Wade, an MIT graduate who founded dating sites whatsyourprice.com and SeekingArrangement.com. The former site allows singles to bid on first dates, while the latter is for “sugar daddies” and “sugar babies” seeking “mutually beneficial relationships.” Wade is suing online payments provider PayPal after being dropped as a client.
PayPal provided payments processing for SeekingArrangement.com when it was founded in 2006, Wade tells ITBusiness.ca. But in 2007 there was a dispute and PayPal stopped accepting payments for membership at that site, although it continued to accept payments for book purchases and other related merchandise on the site. In 2011, Wade launched WhatsYourPrice.com and that’s when PayPal decided to freeze all of his accounts, including his personal one.
“Their policy is certainly arbitrary and they could subjectively decide who they want to do business with for whatever reason they want,” he says. “I was seeing that they were accepting payments from many of our competing dating Web sites including Ashley Madison and Match.com.”
The payments firm ended their relationship only because of the site’s options to seek casual encounters or extramarital affairs, Wade says. But PayPal hasn’t stopped working with Ashley Madison and other sites. Feeling cheated, Wade filed suit in US District Court for unfair business practices. The complaint has yet to come to trial.
But Ashley Madison’s CEO Noel Biderman sets his business apart, in a phone call with ITBusiness.ca. Ashley Madison doesn’t deal in adult content and works with major firms like Apple and Google, he says. It has never encountered a problem with a payments processor not wanting to provide services. He compares his site to Match.com.
“Yes, the majority of my users happen to be in a primary relationship and are looking for something on the side,” he says. “But we are both in a place where people make their choices on real dating. This isn’t some sort of online bordello.”
Wade’s suit is moving forward in the courts. So far, a judge has dismissed PayPal’s motion to drop the suit before a trial. A jury should decide if the contract was breached, it was ruled.
Wade says PayPal’s dropping him as a client has significantly hurt his business. When SeekingArrangement.com was accepting PayPal, it was processing 20 to 25 per cent of payments, he says. “Even today, we’re still getting customer support tickets asking whey we’re not accepting PayPal.”
It’s a good reminder that businesses shouldn’t be too reliant on any one method of payment or payments processor to keep the revenue flowing.
PayPal was contacted for comment, but did not respond before time of publication.
Brian Jackson is the Editor at ITBusiness.ca. E-mail him at [email protected], follow him on Twitter, connect on Google+, read his blog, and check out the IT Business Facebook Page. 
