The complaint alleged that NGL tricked users into paying for subscriptions by sending them computer-generated messages that appeared to be from real people and offering a service for $9.99 a week to reveal their true identities. People who signed up only got “hints” of those identities, whether they were real or not, the enforcers said.
After users complained about “bait-and-switch tactics,” company executives “laughed off” their concerns, referring to them as “suckers,” the FTC said in a release.
NGL, online shorthand for “will not lie,” agreed to pay $5 million and stop marketing to children and teens to settle the lawsuit, which also alleged the company violated children’s privacy laws by collecting data from young people under 13 without parental consent.
The agreement marks a major milestone in the federal government’s efforts to address concerns that technology platforms are exposing children to, and profiting from, harmful material. And it’s one of the most significant actions by the FTC under Chairman Lina Khan, who has taken control of the agency’s technology sector since taking office in 2021.
“We will continue to crack down on businesses that illegally exploit children for profit,” Khan (D) said in a statement.
NGL co-founder Joao Figueiredo said in a statement Tuesday that the company cooperated with the FTC’s investigation for nearly two years and saw “the resolution as an opportunity to make NGL better than ever.”
“While we believe that many of the claims about the youth of our user base are factually incorrect, we anticipate that the agreed-upon age determination and other procedures will now provide guidance to others in our space and hopefully improve politics in general,” Figueiredo said. .
NGL’s popularity has exploded, with a user base reaching 200 million. At one point, it became the most downloaded product in Apple’s app store just a year after its launch in 2021. The platform allows users to anonymously answer questions from friends and social media contacts and markets itself as a place where people can play games like “I never had”.
But it is one of several anonymous messaging services whose proliferation among young people has sparked alarm from child safety advocates, who say the companies have not taken adequate steps to prevent cyberbullying and other harmful activities in their products.
In October, child safety group Fairplay and parent activist Kristin Bride filed a complaint asking the FTC to investigate allegations that the app’s parent company, NGL Labs, illegally marketed to children using unfair and deceptive business practices.
The bride’s 16-year-old son, Carson, died by suicide in 2020 after facing cyberbullying on two separate anonymous messaging services, Yolo and LMK. Bride has said that Carson’s last search on his phone was the way to find out who had been anonymously harassing him online.
“It was extremely disturbing to learn that a new anonymous app, NGL, has hit the market and found a way to monetize their dangerous product by charging vulnerable teenagers for useless tips about who is texting them. ,” Bride said in a statement last year. .
The agency added that it “received valuable assistance from Fairplay and social media reform advocate Kristin Bride” in the case.
Fairplay policy adviser Haley Hinkle said Tuesday that the FTC’s move “demonstrated once again that technology companies will be held accountable for their obligations to children and teens.”
As part of the settlement, NGL will be required to prevent users from accessing the app if they indicate they are under 18, and to delete any data it has received from minors unless a parent signs off on it. The company will also be prohibited from making misrepresentations about its ability to filter harassment online or about the messenger in its app.
While limited to one company, the settlement represents one of the FTC’s most powerful actions to better protect children online under Khan.
The agency unanimously approved the deal 5-0, with both new Republican FTC commissioners joining Khan and other Democrats. The vote is emblematic of bipartisan concern over children’s online safety in Washington.
In a statement, GOP Commissioner Melissa Holyoak said NGL “engaged in truly despicable behavior” by “mocking young people and teenagers” into paid subscriptions. Holyoak criticized NGL for luring new users with messages purportedly submitted by their friends, including phrases such as “Are you straight?” and “I know what you’ve done.”
Andrew Ferguson, the agency’s fellow Republican, said he supported the deal “without reservation,” calling it a “fresh” approach to the agency’s enforcement of children’s online safety. But Ferguson said he did not believe the federal law “categorically prohibits the marketing of any anonymous messaging app to teenagers.”
The agency reached a record $520 million settlement last year with Epic Games, maker of the popular “Fortnite” game series, over allegations that the company violated children’s data privacy laws and tricked players into making purchases. unwanted. But the agreement stopped short of imposing any bans against marketing to under-18s.
The FTC has separately proposed a comprehensive plan to stop Facebook and Instagram’s parent company, Meta, from monetizing the data of children and teens under 18, but the plan has yet to be implemented pending a series of legal challenges from the internet giant. technology. The agency proposed the restrictions as an update to its landmark $5 billion privacy agreement with the company.
The FTC is also considering expanding enforcement of the landmark Children’s Online Privacy Protection Act. Under the proposed regulation, platforms will be required to turn off ads targeted at children under 13 by default.