The complaint alleges that NGL deceived users by sending them computer-generated messages that appeared to come from real people and offering them a service for as much as $9.99 per week to discover their true identities. People who signed up were given only “clues” about those identities, whether they were real or not, authorities said.
After users complained about this “bait-and-switch tactic,” company executives “laughed off” their concerns, calling them “suckers,” the FTC said in a statement.
NGL, an internet short for “not gonna 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 children under 13 without parental consent.
The settlement marks a major step in the federal government’s efforts to address concerns that tech platforms are exposing children to and profiting from harmful content. And it’s one of the most significant moves by the FTC under Chair Lina Khan, who has stepped up the agency’s oversight of the tech sector since taking office in 2021.
“We will continue to crack down on companies 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 had cooperated with the FTC’s investigation for nearly two years and viewed the “resolution as an opportunity to make NGL better than ever.”
“While we believe that many of the claims regarding the youth of our user base are factually incorrect, we anticipate that the agreed-upon age-checking and other procedures will now provide guidance to others in our space and hopefully improve policies overall,” Figueiredo said.
NGL’s popularity has exploded, with a user base surpassing 200 million. At one point, it became the most downloaded product on Apple’s App Store, just a year after its launch in 2021. The platform allows users to anonymously answer questions from their friends and social media contacts and bills itself as a place where people can play games like “Never Have I Ever.”
But it is one of several anonymous messaging services whose prevalence among young people has raised concerns among child safety advocates, who say companies have failed to take adequate steps to prevent cyberbullying and other harmful activity on their products.
In October, child protection group Fairplay and parenting 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.
Bride’s 16-year-old son, Carson, committed suicide in 2020 after being cyberbullied on two separate anonymous messaging services, Yolo and LMK. Bride said Carson’s latest search of his phone was to find out who had been anonymously harassing him online.
“It was extremely concerning to learn that a new anonymous app, NGL, had come to market and found a way to further monetize its dangerous product by charging vulnerable teens for unnecessary clues about who is sending them messages,” 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.
Haley Hinkle, a policy adviser at Fairplay, said Tuesday that the FTC’s decision “demonstrates once again that tech companies will be held accountable for their obligations to children and teens.”
As part of the deal, NGL will have to block users from accessing the app if they indicate they are under 18 and delete all data obtained from young children, unless a parent authorizes it. The company also won’t be allowed to make false claims about its ability to filter cyberbullying or about the sender of messages on its app.
Although limited to a single company, the settlement represents one of the FTC’s most aggressive moves to better protect children online under Khan.
The agency unanimously approved the deal by a vote of 5-0, with the FTC’s two new Republican commissioners joining Khan and other Democrats. The vote is emblematic of bipartisan concern about child online safety in Washington.
In a statement, Republican Party Commissioner Melissa Holyoak said NGL “engaged in truly despicable conduct” by “provoking tweens and teens” into signing up for paid subscriptions. Holyoak called out NGL for luring young users with messages allegedly posed by their friends, including phrases such as “Are you straight?” and “I know what you did.”
Andrew Ferguson, the agency’s other Republican representative, said he supported the agreement “wholeheartedly,” calling it the agency’s “innovative” approach to children’s online safety. But Ferguson said he did not believe federal law “categorically prohibits the marketing of an anonymous messaging app to teens.”
Last year, the agency reached a record $520 million settlement with Epic Games, maker of the popular “Fortnite” video game series, over allegations that the company violated children’s privacy laws and lured players into making unwanted purchases. But the settlement did not impose a ban on marketing to children under 18.
The FTC separately proposed a sweeping plan to ban Facebook and Instagram parent company Meta from monetizing the data of children and teens under 18, but the plan has yet to be implemented due to a series of legal challenges from the tech giant. The agency proposed the restrictions as part of an update to its landmark $5 billion privacy settlement with the company.
The FTC is also considering expanding its enforcement of the landmark Children’s Online Privacy Protection Act. Under the proposed rule, platforms would be required to disable targeted ads to children under 13 by default.