Monday saw a trifecta of troubles for three very different technology firms, though one stood out for the sheer volume it’s being sued for.
Crypto platform BlockFi and weight loss app Noom agreed to legal settlements worth tens of millions of dollars over allegations they neglected securities regulations and hoodwinked customers, respectively. But Facebook-parent Meta stole the show when it was hit by a lawsuit from the state of Texas seeking hundreds of billions of dollars in civil penalties.
From Weight Watchers to Money Poachers
Subscription weight loss app Noom, which forecasted $600 million in revenue last year and counts 45 million users, reached a preliminary $62 million settlement in Manhattan federal court. The company is accused of having tricked its customers into taking “risk-free” trials that were forcibly converted into expensive and difficult-to-cancel renewal plans — the company allegedly would take eight months’ worth of nonrefundable payments, up to $199, from each customer. If approved by the court, Noom will have to pay $56 million in cash and offer $6 million of subscription credits to customers.
Concerning Crypto Paperwork
In US regulators’ first enforcement action on cryptocurrency lending, crypto platform BlockFi agreed to pay $100 million in penalties to the Securities and Exchange Commission and 32 US states. Regulators alleged the company’s BlockFi Interest Accounts, which allow users to earn returns on Bitcoin, Ethereum, and USDT, were unregistered securities and that BlockFi wasn’t registered as an investment company. Coinbase canceled a similar program, called Lend, last year after the SEC threatened to sue.
Facebook’s Ongoing Face Problem
Meta’s biggest social media platform, Facebook, announced it was ending its controversial use of facial recognition technology last year, but that wasn’t enough to stop Texas authorities from eyeing the company with their lasso. On Monday, the state’s Attorney General Ken Paxton filed a lawsuit against Meta for breaching Texas privacy laws and “secretly harvesting Texans’ most personal information — photos and videos — for its own corporate profit.” Facebook — which settled a class-action lawsuit in Illinois over its facial recognition technology for $650 million — said the Texas lawsuit, which is also seeking hundreds of millions in damages, is “without merit.”