(Reuters) - British online dating company Cupid Plc rejected as "misrepresentation and ill-informed speculation" media allegations about its methods to encourage people to buy subscriptions, sending its shares up as much as 79 percent.
The BBC said last month that members of Cupid's online dating services suspected fake "flirtatious" messages had been used to encourage free users to sign up for paid subscriptions.
The firm's websites, cupid.com and flirt.com, allow people to register for free, but they must buy a subscription to reply to messages.
The company said on Friday it had launched an investigation into "a report" about its methods, but a spokeswoman said then that this was not in response to the allegations in the BBC report.
The Edinburgh-based company's shares fell 60 percent on Friday in response to the statement. Up to Friday's close, the stock had fallen 64 percent since the BBC report on February 24.
Ukraine newspaper Kyiv Post published an article on March 15 that said Cupid had hired "motivation managers" to encourage people to buy full subscriptions.
Responding to what it said were "recent comments and market speculation", Cupid said on Monday that the managers' job was to monitor and interrogate its websites to detect technical or product issues and to moderate chat rooms and forums. They do not communicate with free members, it said.
"... Cupid Plc strongly refutes all allegations that its business model or practices and procedures are in any way fundamentally flawed, inappropriate or illegal," it said.
The company, which said it was taking legal advice on the media and allegations, also denied that it was profiting from telephone numbers used to cancel some subscriptions, saying that it operated toll-free numbers for callers from the United States and Australia and had a low-cost number in the UK.
Cupid's website says it has more than 54 million user accounts in 58 countries.
Cupid's shares were up 57 percent at 77 pence at 0934 GMT on the London Stock Exchange.
(Reporting By Richa Naidu in Bangalore; Editing by Maju Samuel and Ted Kerr)
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