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On Tuesday, the FTC unanimously banned<\/a> 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 \u201cpopular\u201d kids (like cheerleaders) to try to lure others onto the predatory hellscape.<\/p>\n \u201cNGL marketed its app to kids and teens despite knowing that it was exposing them to cyberbullying and harassment,\u201d FTC Chair Lina Khan wrote<\/a> in an agency press release. \u201cIn light of NGL\u2019s reckless disregard for kids\u2019 safety, the FTC\u2019s 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.\u201d<\/p>\n The FTC and the Los Angeles DA\u2019s 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<\/a>?) Although NGL is still a relatively niche app with nowhere near the popularity of Instagram, TikTok and other first-tier platforms, it has \u201cexploded\u201d in popularity, according to<\/a> The Washington Post<\/em>. In 2022, it briefly became the most downloaded app on the iOS App Store.<\/p>\n 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 \u201cworld class AI content moderation\u201d with \u201cdeep learning and pattern matching algorithms\u201d to prevent cyberbullying and other concerning behavior. It also sent fake, computer-generated messages \u2014 which users believed were from their real friends \u2014 with provocative prompts like \u201cAre you straight?\u201d and \u201cI know what you did.\u201d<\/p>\n In addition, the company\u2019s predatory business practices also allegedly included bait-and-switch upsell tactics, which promised to reveal the identity of anonymous \u201cfriends\u201d (which may have been fake) if they paid up to $10 weekly for a premium subscription. After paying, the service would only supply useless \u201chints\u201d like the message\u2019s timestamp, the sender\u2019s general location and whether they used an iPhone or Android phone. It would also turn on recurring, hard-to-cancel charges that users didn\u2019t expect.<\/p>\n Even worse, Joao Figueiredo, one of the company\u2019s co-founders, allegedly directed employees to look on \u201chigh school cheer [Instagram] pages\u201d to find \u201ckids who are popular to post and get their friends to post.\u201d One user allegedly reported that their friend attempted suicide because of their experience on NGL.<\/p>\n When consumers complained, NGL executives allegedly laughed them off as \u201csuckers.\u201d<\/p>\n The FTC and Los Angeles DA added that NGL violated the COPPA Rule. It requires companies with apps \u201cthat are directed to or knowingly being used by children under 13 to inform their parents about the personal information they collect.\u201d Other accusations include a violation of the Restore Online Shoppers\u2019 Confidence Act.<\/p>\n In addition, the dumpster fire known as NGL allegedly made no attempt to verify users\u2019 ages, failed to obtain parental consent to collect and use data from preteen children and failed to honor parents\u2019 requests to delete children\u2019s data. Finally, the company supposedly \u201cretained children\u2019s data longer than reasonably necessary to fulfill the purpose for which the data was collected.\u201d<\/p>\n Under the settlement terms, NGL and its cofounders have agreed to pay $4.5 million to \u201cprovide redress to consumers\u201d and a $500,000 civil penalty to the LA DA\u2019s 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).<\/p>\n 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<\/a> of their own.<\/p>\n<\/div>\n