United States of America: Reached settlement in FTC lawsuit against NGL Labs regarding unfair marketing of its service to children and deceptive claims regarding AI content moderation program

On 9 July 2024, the Federal Trade Commission (FTC) and the Los Angeles District Attorney's Office reached a settlement with NGL Labs and its co-founders regarding alleged unfair and deceptive practices in the operation of their anonymous messaging app. The defendants are mandated to pay a settlement of USD 5 million and are prohibited from offering their messaging app “NGL: ask me anything” to individuals under 18. The settlement was reached following an investigation that determined that NGL Labs marketed its application to children and teens based on false claims about its artificial intelligence (AI) content moderation capabilities. Additionally, the FTC alleged that NGL Labs sent fake messages to increase usage and mislead users into enrolling in a paid service without clear consent for recurring charges. Under the reached settlement, NGL Labs has to implement a neutral age gate barring users under 18, delete personal information collected without parental consent for those under 13, stop misrepresenting message senders, AI capabilities, and subscription terms, and obtain consent before billing for subscriptions.