According to the complaint, NGL tricked users into paying subscription fees by sending computer-generated messages that appeared to come from real people and offering as much as $9.99 a week to find out their real identities. Enforcement officials say people who signed up only received “hints” about their identities, whether they were real or not.
In its statement, the FTC said that after users complained about “bait-and-switch tactics,” company executives “laughed off” their concerns, calling them “silly.”
NGL, an acronym that stands for “Don’t Lie on the Internet,” agreed to pay $5 million to settle the lawsuit and stop marketing to children and adolescents. The lawsuit also alleged that the company violated the Children’s Privacy Act by collecting data from people under the age of 13 without parental consent.
The settlement marks a major milestone in the federal government’s efforts to address concerns that tech platforms are exposing children to harmful content and profiting from it. It also marks one of the FTC’s most significant actions under Chairman Lina Khan, who has stepped up her oversight of the agency’s tech sector since taking over as chair in 2021.
“We will continue to crack down on companies that illegally exploit children for profit,” Khan (D-Ore.) said in a statement.
NGL co-founder Joan Figueiredo said in a statement Tuesday that the company had cooperated with the FTC’s investigation for nearly two years and saw the resolution as “an opportunity to leave NGL better than ever.”
“While we believe many of the assertions made about the youth of our user base are factually incorrect, we hope that the agreed-upon age limits and other steps will provide guidance to other companies in our industry going forward and lead to improved policies overall,” Figueiredo said.
NGL has exploded in popularity, with over 200 million users. Just one year after its launch in 2021, it was briefly the most downloaded product on Apple’s App Store. The platform is advertised as a place where users can anonymously answer questions from friends and social media contacts and play games such as “Never Have I Ever.”
But it’s one of several anonymous messaging services that are popular among young people, and child safety advocates are concerned that the companies aren’t taking adequate steps to prevent cyberbullying and other harmful behavior on their products.
In October, child safety group Fair Play and parent activist Christine Bride filed a complaint with the FTC seeking an investigation into allegations that the app’s parent company, NGL Labs, used unfair and deceptive trade practices to illegally market to children.
Bride’s 16-year-old son, Carson, committed suicide in 2020 after being cyberbullied on two anonymous messaging services, Yolo and LMK. Bride said the last time Carson searched his phone was when he was trying to find a way to track down people who were anonymously harassing him online.
“We are deeply concerned to learn that a new anonymous app, NGL, has come onto the market and has found a way to further profit from this dangerous product by charging vulnerable young people for providing them with useless hints about who is messaging them,” Blythe said in a statement last year.
The department added that it had “received invaluable assistance” on the matter from fair play and social media reform advocate Christine Blyde.
Haley Hinkle, policy counsel at Fair Play, said Tuesday that the FTC’s action “demonstrates once again that tech companies have a duty to children and young people.”
As part of the agreement, NGL will be required to block access to the app if users indicate they are under 18 and delete any data it obtains from young children unless parental approval is obtained. The company will also be barred from misrepresenting its cyberbullying filtering capabilities or who is sending messages on the app.
While the settlement is limited to one company, it represents one of the FTC’s strongest actions under the Khan decision to better protect children online.
The FTC approved the settlement unanimously, 5-0, with the FTC’s two new Republican commissioners joining Khan and other Democrats in a vote that symbolizes bipartisan concern in Washington about children’s online safety.
Republican Party Chairwoman Melissa Holyoak said in a statement that NGL “engaged in a truly despicable practice of teasing pre-teens and teenagers into paying memberships.” Holyoak accused NGL of luring young users with messages purportedly posted by friends that included phrases like “Are you straight?” and “I know what you did.”
Andrew Ferguson, another Republican on the department, said he “unconditionally” supports the agreement, calling it a “novel” approach to the department’s enforcement of children’s online safety, but said he doesn’t believe federal law “provides a blanket ban on the marketing of any anonymous messaging apps to teenagers.”
Last year, authorities reached a record $520 million settlement with Epic Games, maker of the popular video game series “Fortnite,” over charges that the company violated children’s data privacy laws and tricked players into making purchases they didn’t want, but the settlement stopped short of banning marketing to people under the age of 18.
The FTC separately proposed a comprehensive plan to ban Facebook and Instagram’s parent company, Meta, from monetizing the data of children and young people under the age of 18, but the plan has yet to be implemented pending a series of lawsuits from the tech giant. The FTC proposed the restrictions as an update to its historic $5 billion privacy settlement with the company.
The FTC is also considering expanding enforcement of the landmark Children’s Online Privacy Protection Act, with proposed rulemaking requiring platforms to turn off targeted advertising to children under the age of 13 by default.
