This is the first time that the Federal Trade Commission has banned an app from being offered to users under the age of 18. The commission announced on Tuesday that it will ban anonymous social app NGL from advertising or offering its apps to minors. NGL will pay $5 million to settle the lawsuit.
Launched in 2021, NGL has rocketed to the top of app stores based on the premise that users can post a link to their social accounts so their friends can click on it and submit questions anonymously.
The FTC and the Los Angeles District Attorney's Office allege that the app and its co-founders not only sold NGL to minors, but also falsely claimed that its AI content moderation system filtered out harmful messages and cyberbullying.
The complaint also alleges that NGL sent fake questions made to appear to come from real people in order to trick users into paying a $9.99 monthly subscription fee for clues about who was sending the messages.
TechCrunch discovered this when we shared an NGL link to take questions on our Instagram stories in 2022. The link was live for just a second and then removed. A few hours after we posted the link, we had received questions from six “people” on NGL. But in reality, the link wasn't live for more than a second, so no one had seen our link.
In 2022, after failing to generate interest in the app, NGL began automatically sending users fake, computer-generated questions, according to the FTC. Users began receiving fake messages like “Are you straight?” and “I know what you did,” according to the complaint. When users saw the questions, NGL encouraged them to purchase a monthly subscription to the app to get hints about their identity, even though the questions were from a bot.
“NGL's bait-and-switch tactics led to numerous consumer complaints, but NGL executives simply laughed it off, calling such users 'idiots,'” the FTC said.
The complaint also alleges that NGL failed to clearly disclose consent to recurring charges for its premium services and that the company violated the Children's Online Privacy Protection Act (COPPA) rule, which requires apps aimed at children under the age of 13 to notify parents about the personal information they collect.
“NGL knowingly marketed apps to children and young people, putting them at risk of cyberbullying and harassment,” FTC Chairman Lina Khan said in a press release. “Given NGL's reckless disregard for children's safety, the FTC's order prohibits NGL from selling or offering its apps to children under the age of 18. The FTC will continue to crack down on companies that illegally exploit children for profit.”
As part of the settlement, NGL must implement age restrictions that prevent new and existing users from accessing the app if they are under the age of 18. NGL is also prohibited from misrepresenting the sender of messages and must disclose information about recurring charges. Additionally, the company is prohibited from misrepresenting the capabilities of its AI content moderation system to filter cyberbullying.
“After nearly two years of cooperating with the FTC's investigation, we see this resolution as an opportunity to make NGL better than ever for our users and believe this agreement is in our best interest,” NGL co-founder Joan Figueiredo said in a statement to TechCrunch. “While we believe many of the allegations about the youth of our user base are factually incorrect, we hope that the age restrictions and other steps we agreed upon will provide guidance to others in our industry and lead to improved policies overall,” he added.
The settlement marks one of the most significant steps taken by the FTC, led by Chairman Lina Khan, aimed at preventing social media services from profiting from activities that may harm children.