NGL becomes the first app banned from hosting minors by the FTC

On Tuesday, the FTC unanimously banned the social messaging app NGL from hosting minors as part of a $5 million settlement. The first-of-its-kind ban comes after revelations that the company actively marketed the app to children with bait-and-switch tactics, false claims about AI moderation and the targeting of “popular” kids (like cheerleaders) to try to lure others onto the predatory hellscape.

“NGL marketed its app to kids and teens despite knowing that it was exposing them to cyberbullying and harassment,” FTC Chair Lina Khan wrote in an agency press release. “In light of NGL’s reckless disregard for kids’ safety, the FTC’s order would ban NGL from marketing or offering its app to those under 18. We will keep cracking down on businesses that unlawfully exploit kids for profit.”

The FTC and the Los Angeles DA’s office worked together on the complaint, which paints a picture of an exploitative business that prioritized building its social graph above honoring even the most fundamental of ethics. (Sound familiar?) Although NGL is still a relatively niche app with nowhere near the popularity of Instagram, TikTok and other first-tier platforms, it has “exploded” in popularity, according to The Washington Post. In 2022, it briefly became the most downloaded app on the iOS App Store.

The company markets the app as a place to message anonymously with unknown friends and contacts from other social channels. That alone sounds like a recipe for disaster. But the FTC says the company made it much worse with false claims of using “world class AI content moderation” with “deep learning and pattern matching algorithms” to prevent cyberbullying and other concerning behavior. It also sent fake, computer-generated messages — which users believed were from their real friends — with provocative prompts like “Are you straight?” and “I know what you did.”

In addition, the company’s predatory business practices also allegedly included bait-and-switch upsell tactics, which promised to reveal the identity of anonymous “friends” (which may have been fake) if they paid up to $10 weekly for a premium subscription. After paying, the service would only supply useless “hints” like the message’s timestamp, the sender’s general location and whether they used an iPhone or Android phone. It would also turn on recurring, hard-to-cancel charges that users didn’t expect.

Even worse, Joao Figueiredo, one of the company’s co-founders, allegedly directed employees to look on “high school cheer [Instagram] pages” to find “kids who are popular to post and get their friends to post.” One user allegedly reported that their friend attempted suicide because of their experience on NGL.

When consumers complained, NGL executives allegedly laughed them off as “suckers.”

The FTC and Los Angeles DA added that NGL violated the COPPA Rule. It requires companies with apps “that are directed to or knowingly being used by children under 13 to inform their parents about the personal information they collect.” Other accusations include a violation of the Restore Online Shoppers’ Confidence Act.

In addition, the dumpster fire known as NGL allegedly made no attempt to verify users’ ages, failed to obtain parental consent to collect and use data from preteen children and failed to honor parents’ requests to delete children’s data. Finally, the company supposedly “retained children’s data longer than reasonably necessary to fulfill the purpose for which the data was collected.”

Under the settlement terms, NGL and its cofounders have agreed to pay $4.5 million to “provide redress to consumers” and a $500,000 civil penalty to the LA DA’s office. From now on, the company will have to require an age gate that prevents new and current users under 18 from using the app, deleting all info associated with those under 13, agreeing not to misrepresent the origins of messages, make false claims about AI tech and received consent from consumers before billing them for subscriptions (while making canceling recurring charges simple).

It remains to be seen whether the FTC can use the unanimous, bipartisan ruling against NGL as a precedent to go after bigger fish in the social sphere using egregiously unethical marketing tactics of their own.