Cupid rejects claims that staff pose as members

ONLINE dating business Cupid have sought to stem a wave of attacks on the company as it hit back at allegations over its business model.

Shares in the Edinburgh-headquartered company soared by 53 per cent – recovering some of the heavy losses seen on Friday – after it issued a second statement to the stock market following claims which emerged from Ukraine where many of its staff are based.

Cupid said that, following an investigation by its executive directors, the board had concluded it “does not employ members of staff to create fake profiles, impersonate users or use any other dubious practice to encourage customers to take out subscriptions or in order to retain existing customers”.

It also said that there has been “a great deal of misrepresentation and ill-informed speculation in the marketplace” and that it was taking legal advice.

In addition to a Ukrainain newspaper article about an undercover reporter’s experience of applying for a job with Cupid, in recent weeks the company has been the subject of a BBC radio documentary and of critical postings by a number of high-profile share tipsters and financial bloggers.

It has also attracted significant attention from short sellers including Simon Cawkwell, known as Evil Knievil.

The war of words around the company prompted analysts at joint house broker Numis yesterday to liken the situation to the hysteria around the Salem witch trials.

The allegations made in Ukrainian newspaper Kyivpost centred on claims by an undercover reporter who applied for a job with the company’s “motivation team”.

Cupid yesterday said that an internal investigation had concluded that the team “does not communicate with free members, nor does it exist to entice paying subscribers to renew”.

“The team is not incentivised to convert or extend memberships,” it added.

An independent audit of its customer database and processes is being carried out by a Big Four accounting firm with findings expected to be announced by the end of the second quarter of the year. Brian Bonner, editor of the English-language Kyivpost, told The Scotsman yesterday: “We stand by the story. We are confident in its accuracy and the credibility of the reporting. We await the results of Cupid’s independent audit and will report on those findings. Moreover, our story is consistent with what the BBC found and what several customers of Cupid have complained about.”

In a statement, Cupid also responded to recent accusations that the company is profiting from the telephone numbers used to cancel some of its subscriptions.

“The operation of these lines is a service to our customers at a financial cost to the company, not a source of revenue,” it said.

It also said to “eliminate any speculation on related party transactions”, it had reached agreement with a company connected to Cupid chief executive Bill Dobbie for repayment of the full current balance outstanding of £2.2m within the next three months.

Cupid accompanied its statement with a trading update which said revenues are more than 20 per cent higher than in the same period of last year.

The shares closed up 26p at 75p after earlier rising by as much as 75 per cent.