Houseparty has become one of the most downloaded apps in several countries, with up to two million downloads a week in recent days.
But online rumours emerging on Monday 30th March alleged that downloading the app led to other services such as Netflix and Spotify being hacked.
The company said there is “no evidence” to back up those claims and has offered a $1m (£810,750) reward for evidence the company was the victim of a commercial smear campaign.
Online gaming firm Epic Games, which also makes Fortnite, purchased Houseparty from its creator in 2019.
Epic Games has not said why it believes Houseparty is the victim of a smear attack but promised to pay the first person to provide evidence of this.
Several people posted on Twitter screenshots they claimed showed they were locked out of applications like Netflix, Spotify and even bank accounts after they downloaded Houseparty.
The app owner began fighting rumours on social media that the video chat app was the reason other apps were being hacked. Calls were to delete Houseparty from devices as fears rose that it compromised security.
However, Houseparty said does not access third-party apps like Netflix or Spotify, though it does ask for access to user’s contacts and connections on Facebook and Snapchat.
The company issued a statement denying those allegations.
“We’ve found no evidence to suggest a link between Houseparty and the compromises of other unrelated accounts,” a spokesperson for Epic Games said.
“As a general rule, we suggest all users choose strong passwords when creating online accounts on any platform.”
Houseparty, which allows users to have group video chats and play games virtually with friends, is not without its risk, however.
Privacy and parenting experts have warned about “gate crashers” entering conversation on the app.
If a chat is left “unlocked” any user can enter it uninvited – or “gate crash” – as long as they are connected to someone in the chat. There are even reports of pornographic images being shown to young or unwitting users.