• by Colin Kirkland , July 9, 2024

For the first time in U.S. history, the Federal Trade Commission has banned a digital platform from serving users under the age of 18.

The FTC accused NGL -- a social-media app that delivers anonymous messages -- and its co-founders of unfairly and “aggressively” marketing the service to children and teens.

Launched in 2021, the California-based app claimed itself as a “safe space for teens,” using “world class AI content moderation” to combat cyberbullying as its 200 million users received anonymous messages from friends, followers, and, starting in 2022, fake accounts created by NGL.

According to the FTC and the Los Angeles DA’s Office, NGL -- which ironically stands for “not gonna lie” -- not only failed to prevent harmful messaging and cyberbullying but sent fake messages, such as “are you straight?” or “I know what you did,” that appeared to come from real people.

The FTC and the Los Angeles DA's office also said NGL tricked users into signing up for paid subscriptions, and also failed to clearly disclose and obtain consent for recurring charges for its NGL Pro service, which cost as much as $9.99 a week, therefore violating the Restore Online Shoppers’ Confidence Act.

Users would receive “hints” about the made-up sender, which eventually prompted consumers to complain. 

In terms of NGL’s marketing strategy, the FTC says company executives Raj Vir and Joao Figueiredo explicitly instructed employees to get “kids who are popular to post and get their friends to post,” noting that the “best way is to reach out on [Instagram] by finding popular girls on high school cheer [Instagram pages].”

NGL also allegedly lied about the power of its AI-powered system, which failed to filter out cyberbullying and harmful messaging. According to the complaint, one consumer said a friend had attempted suicide because of the app.

In addition, the FTC found NGL to be in violation of the COPPA Rule, which requires apps and other online services directed at children under 13 to inform their parents about personal information they collect from children and obtain legitimate parental consent.

NGL allegedly failed to verify the age of its users, did not obtain consent, and did not honor parents’ requests to delete their children’s personal data. 

As a result, Vir and Figueiredo will pay $5 million to settle the lawsuit and will be banned from offering NGL to anyone under the age of 18.

“While we believe many of the allegations around the youth of our user base are factually incorrect, we anticipate that the agreed upon age-gating and other procedures will now provide direction for others in our space, and hopefully improve policies generally,” Figueiredo said in a statement, adding that he and his partners will attempt to make NGL “better than ever.”

The settlement has set a new precedent in the U.S., as the federal government has decided to take serious action against social-media apps that are clearly posing a threat and harm to the safety and well being of minors while profiting from it.

Under Chair Lina Khan, the FTC has increased public scrutiny of tech companies in general, with Khan stating that the organization will “keep cracking down on businesses that unlawfully exploit kids for profit.”