Ash­ley Madi­son CEO steps down in wake of data hack­ing


The CEO of the com­pany that runs adul­tery web­site Ash­ley Madi­son is step­ping down in the wake of the mas­sive breach of the com­pany’s com­puter sys­tems and out­ing of mil­lions of its mem­bers.

The abrupt de­par­ture of Noel Bi­der­man, which came with­out the ap­point­ment of an in­terim re­place­ment, could be another sign that the web­site’s days may be num­bered, ex­perts say.

“Un­less they can im­me­di­ately as­sure the public that their in­for­ma­tion is pro­tected, then their busi­ness is over,” says Lawrence Kel­logg, a part­ner with the law firm Levine Kel­logg Lehman Sch­nei­der & Grossman LLP, who spe­cial­izes in class ac­tion law­suits.

“The only rea­son for an adul­terer to join the ser­vice is to keep their in­for­ma­tion pri­vate. Ab­sent that, they don’t have a busi­ness.”

Kel­logg says that if the law­suits from Ash­ley Madi­son mem­bers keep piling up, Avid Life Media Inc., Ash­ley Madi­son’s par­ent com­pany, may ul­ti­mately end up fil­ing for bank­ruptcy pro­tec­tion.

And while those who sue the com­pany may have a tough time prov­ing their claims, costs re­lated to the court fights could drain the com­pany dry, he says.

In its state­ment, Avid Life says Bi­der­man’s de­par­ture is ef­fec­tive im­me­di­ately and was a mu­tual de­ci­sion.

The com­pany will be led by its se­nior man­age­ment un­til a re­place­ment is named.

“This change is in the best in­ter­est of the com­pany and al­lows us to con­tinue to pro­vide sup­port to our mem­bers and ded­i­cated em­ploy­ees,” Avid Life’s state­ment reads. “We are stead­fast in our com­mit­ment to our cus­tomer base.”

Bi­der­man didn’t im­me­di­ately re­turn an email sent to his work ac­count seek­ing com­ment.

Bi­der­man, who touted him­self as “the king of in­fi­delity,” made mil­lions off the phi­los­o­phy that cheat­ing is a nat­u­ral part of mar­ried life. The site charges a fee each time a mem­ber sends a po­ten­tial lover a mes­sage.

Bi­der­man has claimed to be a de­voted hus­band and that his wife of 12 years would be heart­bro­ken if he ever broke his vows to her.

Pri­vately held Toronto- based Avid Life grossed US$115 mil­lion in earn­ings last year, ac­cord­ing to tax doc­u­ments and fig­ures shared by Bi­der­man with Forbes.

Avid Life’s state­ment re­leased Fri­day went on to say that it’s “ac­tively ad­just­ing” to the fall­out from the hack­ing and con­tin­ues to pro­vide ac­cess to its ser­vices. The com­pany, which has of­fered a CA$500,000 (US$378,204) re­ward for in­for­ma­tion lead­ing to the ar­rest of the hack­ers, adds that it con­tin­ues to co­op­er­ate with in­ter­na­tional law en­force­ment in their in­ves­ti­ga­tions.

While Bi­der­man’s de­par­ture was a nec­es­sary move, it alone won’t be enough to save the com­pany, given how much it mar­keted its prom­ises of con­fi­den­tial­ity, says Aaron Gor­don, a part­ner with Schwartz Media Strate­gies, a Mi­ami-based public re­la­tions firm that does cri­sis man­age­ment.

“They can fold up and call it a day, but re­al­ize that there’s a de­mand for these kinds of ser­vices and that some­thing else will bub­ble up and take over the mar­ket,” Gor­don says.

“Or they could re­brand and come back to the mar­ket with a new brand cen­tered on trust and se­cu­rity, but not con­fi­den­tial­ity.”

Gor­don pointed to ValuJet as an ex­am­ple of a com­pany that was able to suc­cess­fully re­make it­self af­ter a dis­as­ter.

Af­ter a Florida plane crash in 1996 that killed all 110 peo­ple aboard, ValuJet bought AirTran, adopted the smaller ri­val’s name and moved its head­quar­ters to Or­lando, Florida. The com­pany was sub­se­quently ac­quired by South­west Air­lines Co.

Hack­ers orig­i­nally breached Avid Life’s sys­tems in July, ac­cus­ing it of fill­ing the site with fake pro­files and charg­ing fees for wip­ing pro­files that were never truly deleted.

The hack­ers posted the in­for­ma­tion online a month later af­ter the com­pany didn’t com­ply with their de­mands to shut down.

The post­ing of the data — in­clud­ing names, emails, home ad­dresses, fi­nan­cial data and mes­sage history — has so far re­sulted in a flurry of law­suits through­out the U.S.

There also have been re­ports of ex­tor­tion at­tempts and two un­con­firmed sui­cides, ac­cord­ing to Cana­dian po­lice.

The credit-card in­for­ma­tion of U.S. gov­ern­ment work­ers — some with sen­si­tive jobs in the White House, the leg­is­la­ture and the Jus­tice Depart­ment — also was re­vealed in the breach.

And hun­dreds of email ad­dresses in the data re­lease ap­pear to be con­nected to fed­eral, pro­vin­cial and mu­nic­i­pal work­ers across Canada.

Ash­ley Madi­son, whose slo­gan is “Life is short. Have an af­fair,” pur­ports to have nearly 40 mil­lion mem­bers.

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