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July 9 (UPI) -- The Federal Trade Commission on Tuesday banned the anonymous messaging app "NGL: ask me anything" from letting underage users on the platform in order to settle a lawsuit contending it was unfairly marketed to consumers, which in turn further intensified cyberbullying. "NGL marketed its app to kids and teens despite knowing that it was exposing them to cyberbullying and harassment," FTC Chair Lina M. Khan said.
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As part of the agreement, NGL Labs LLC and its two co-founders, Raj Vir and Joao Figueiredo, will also pay a $5 million settlement and will be banned from offering the app to anyone under age 18, according to an FTC news release on Tuesday.
This marks the first time the federal agency has banned an app from serving users younger than age 18.
"In light of NGL's reckless disregard for kids' safety," Khan said, the FTC's order "would ban NGL from marketing or offering its app to those under 18," adding that the federal regulatory agency "will keep cracking down on businesses that unlawfully exploit kids for profit."
In a concurring statement, two FTC commissioners say they voted to approve the complaint because "I agree that it was unfair to market this anonymous messaging app to teenagers in the way that the defendants marketed it," read a joint statement Tuesday by FTC Commissioners Melissa Holyoak and Andrew N. Ferguson.
"If the allegations in the complaint are true," they wrote, NGL "sent fake, anonymous, and distressing messages to minors specifically designed to make them doubt their social worth, as part of a fraudulent scheme to convince those minors to pay for the ability to see who sent the messages."
About half of U.S. parents think social media is bad for their kids' mental health, a survey revealed last year. Launched in 2021, the California-based NGL is as an anonymous messaging service that allows users to get anonymous messages from friends or social media followers.
The FTC and Los Angeles DA's office allege NGL operators actively pushed the service on kids and made false claims about its AI content moderation program to filter out harmful messages, alleging that NGL sent fake messages looking as if it came from real people in order to trick users into paying a monthly $9.99 subscription to get hints about who sent random messages, allegedly in violation of the Children's Online Privacy Protection Act Rule, known as "COPPA."
And while the company has not admitted wrongdoing and has so far been cooperating, the L.A. DA's office says Tuesday's proposed judgment mandates NGL use content moderation or AI to filter out cyberbullying.
"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 wrote in a statement to TechCrunch.
"While we believe many of the allegations around the youth of our user base are factually incorrect," Figueiredo added, "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."
This new move, the DA's office said, sends a clear message that "deceptive practices" and the "targeting" of vulnerable populations "will not be tolerated."
"The consequences of these actions can be severe," said Los Angeles DA George Gascon.
A Harvard University study outlined how some of the country's leading social media companies generated nearly $11 billion in combined ad revenues just from U.S. users younger than 18 in 2022, with platforms such as Instagram at $4 billion in revenue, TikTok taking $2 billion and YouTube raking in $1.2 billion that year.
"The anonymity provided by the app can facilitate rampant cyberbullying among teens, causing untold harm to our young people," Gascon said. "We cannot tolerate such behavior, nor can we allow companies to profit at the expense of our children's safety and well-being."
Meanwhile, two states so far this year, Florida and New York, have enacted legislation aimed at placing some regulations on social media companies in order to better protect teens online.
"Deceptive marketing practices are harming children online," Rep. Kathy Castor, D-Fla., posted Tuesday on X in response to the NGL announcement.
A 2023 Pew Research Center survey found how U.S. teens continue to use online platforms at high rates, with many using YouTube, TikTok, Snapchat and Instagram "almost constantly" despite the growing concerns about the effect of social media use on young minds.
And in its first time doing so, the American Psychological Association last year issued 10 science-based recommendations for teen and preteen social media use, comparing it to needed training in order to get a driver's license.
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The American Psychological Association has more on children and social media.
