FTC Bans an App for Minors for the First Time

The Federal Trade Commission (FTC) has banned messaging app NGL for users under 18 years old and announced the company will pay $5 million to settle claims related to its marketing to underage users. If approved, the order would be the first instance of the FTC banning an app for underage users.

The FTC and Los Angeles District Attorney’s Office filed a complaint against NGL Labs and founders Raj Vir and Joao Figueiredo for failing to protect young users, false advertising, and failing to adequately inform users about incurred charges. The proposed order by the FTC will come into effect once it is approved by a federal court.

If the order is approved, NGL will need to implement age verification capabilities to ensure users under 18 cannot access the app. It will also be required to pay $4.5 million that will be used to provide redress to customers, and a $500,000 civil penalty.

NGL, which derives its name from the online shorthand for the slang term “not gonna lie,” allows users to receive anonymous messages from their social media followers.

The FTC claims NGL aggressively marketed toward children and teens despite being aware of the risk it would increase bullying and worsen minors’ mental health. The agency alleges that NGL executives encouraged employees to reach out directly to high school students to promote the app.

Crucially, the FTC says that NGL exaggerated its content moderation capabilities and left younger users open to harassment. It also says NGL violated a federal regulation that requires online services to obtain parental consent to collect data for users under 13 years old.

One alleged instance of manipulative marketing featured computer-generated messages. The FTC claims that to drive interest in the app, NGL in 2022 sent users computer-generated messages. Because the messages are anonymous, users believed they came from real people who followed them on social media.

When users received replies to their prompts, they would receive advertisements for NGL Pro, a premium service that purported to reveal the identity of responders for up to $9.99 per week.

The FTC’s complaint claims that NGL Pro users were not given access to the names of those sending the messages. Instead, the app revealed small details such as the device used or the user’s general location. The FTC also charges that the process of signing up for paid services lacked transparency, and users weren’t aware of the recurring weekly fees.

TikTok was also recently put under the FTC’s microscope due to concerns about how it collects and handles data from minors.