The novel settlement terms — which are still subject to approval by a judge — indicate the latest effort by the FTC to crack down on companies that violate kids’ privacy or otherwise harm them. The commission has issued several complaints involving the Children’s Online Privacy Protection Act (COPPA), including against Fortnite-maker Epic Games, Microsoft’s Xbox, and a weight loss app from Weight Watchers marketed to kids. But banning a company from offering their app to kids sets this settlement apart.
NGL is an app where users can solicit anonymous messages or questions from peers. On its Google Play Store page, it encourages users to share their NGL link in their Instagram bio “To get even more messages.” The FTC and LA DA’s office accused NGL and its two co-founders of tricking young users into signing up for the paid version of the service by sending fake messages that seemed to be from real people and falsely promising that paying would reveal the senders’ identities. But when users signed up for as much as $9.99 per week, they were only given “hints” as to the senders’ identities, the complaint alleges. NGL’s product lead allegedly wrote “Lol suckers” in a text with the company’s co-founders in response to a customer complaint that the paid version doesn’t actually show who sent certain messages.
NGL also falsely claimed it could filter out cyberbullying and other harmful messages through artificial intelligence content moderation tools, according to the enforcers’ complaint. They allegedly marketed the app as a “fun yet safe place” for “young people … to share their feelings without judgment from friends or societal pressures” and challenged Apple’s suggestion that the app should not be rated for individuals “12+.” But in reality, according to the complaint, cyberbullying was “rampant” on the service, and the company allegedly received consumer complaints of self-harm and suicide attempts that users blamed on experiences on the NGL app.
The app also allegedly violated the COPPA Rule by failing to get parents’ consent for kids under 13 on the service or honoring their requests to delete their kids’ data. In addition to the age-gating terms, NGL agreed to pay $5 million to settle the charges.
“After nearly two years of cooperating with the FTC’s investigation, we view this resolution as an opportunity to make NGL better than ever for our users and we think the agreement is in our best interest,” NGL co-founder Joao Figueiredo said in a statement. “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.”
The commissioners voted 5-0 to file the complaint and settlement order. But the two Republican commissioners made clear their belief that Section 5 of the FTC Act, which bars deceptive business practices, cannot necessarily be used against any anonymous messaging app marketed to kids. In a concurring statement, Republican Commissioner Andrew Ferguson wrote that he supports the complaint against NGL and believes the app’s “alleged conduct, tailormade to manipulate the vulnerable teenage psyche, was reprehensible and unfair.” But, he added, “it does not follow that Section 5 categorically prohibits marketing any anonymous messaging app to teenagers.” Fellow Republican Commissioner Melissa Holyoak joined the statement.
The Republican commissioners’ statement is significant at a time when states across the country are passing laws to age-gate parts of the internet. The Supreme Court recently agreed to take up a case dealing with a Texas age verification law. Ferguson warned that interpreting any law to categorically ban anonymous messaging services to minors, “would create grave constitutional concerns.” He added that there are “real benefits” to allowing teens anonymity online, including protecting them from the cancel culture “mob.” He also said Holyoak “correctly observes that it can be used to encourage at-risk teenagers to reach out for help that they might not otherwise feel comfortable seeking.”
