A popular anonymous messaging app NGL has promised to stop marketing to children and agreed to pay a $5 million fine after the Federal Trade Commission accused it of lying to users about its service and its capabilities, including artificial intelligence.
The FTC said in a statement Tuesday that it has reached a settlement with app maker NGL Labs after an investigation found instances of alleged false claims, deceptive business practices and illegal tracking of children’s data. NGL is an internet abbreviation for “not gonna lie.”
In a complaint filed with the US District Court for the Central District of California, the FTC described how NGL broke numerous consumer-protection laws, including falsely claiming its “world-class AI content moderation” could prevent bullying and harassment. In reality, these issues were “rampant” on the app, the FTC said in its filing. The company also marketed a $10 per week “NGL Pro” subscription that promised to reveal the sender of a message it said came from a friend or contact. Such messages were actually sent by the company.
NGL said in a statement that “many” of the FTC’s allegations were “factually incorrect,” particularly disagreeing about whether the company actively marketed its app to children under the age of 13. Still, NGL said it will agree to the multimillion-dollar fine and a ban from offering its service to people under the age of 18, which it described as “age-gating.” The company announced other changes on its website.
NGL’s settlement marks an unusual case in which the US government agrees to quantifiable accountability from a tech company that profits from children using its service, despite knowing its product has a negative impact on them. Though US officials have made similar accusations against Facebook, Instagram and WhatsApp owner Meta and YouTube owner Alphabet, they haven’t yet made much substantive progress. Meanwhile, other social media apps including NGL, have attracted consumers by promising alternatives.
The FTC’s moves also mark one of the first times US officials have challenged the veracity of a company’s AI technology claims in court. Other legal claims have largely come from copyright holders who say AI companies stole their work and customers who say promised features and capabilities don’t live up to their promises.
“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,” the company statement said.
Fakes, complaints and addiction
Over a two-year investigation, the FTC said it learned NGL received numerous complaints from parents of children and teens, including reports that use of the app led to instances of self-harm and attempted suicide. Despite that knowledge, NGL “made no changes to the design” of its app or marketing in response.
When customers complained, some NGL employees laughed, including one who wrote “Lol suckers” in a text message with NGL co-founders Raj Vir and Joao Figueiredo, according to the FTC’s filing.
At more than one point, the NGL App was reported to be the most downloaded app in Apple’s App Store, the FTC said. During that time, the company’s co-founders wrote internal messages about how some customers had become “addicted,” despite the app sending them fake messages.
“Despite being aware of negative consumer reviews, consumer complaints, and feedback from Apple,” the FTC said NGL “continued to make the same representations to consumers.”
