The U.S. Federal Trade Commission and the Los Angeles District Attorney’s Office are taking action against NGL Labs, LLC, and two of its co-founders for multiple violations related to their anonymous messaging app, which allows users to receive anonymous messages from friends and social media followers.

Key allegations include marketing the service to children and teens, falsely claiming its AI content moderation filtered out harmful messages, and sending fake messages to trick users into signing up for paid subscriptions, promising to reveal the message senders’ identities. Consumers who paid up to $9.99 a week only received vague “hints” about the sender instead of their names.

Additionally, NGL violated the Restore Online Shoppers’ Confidence Act by failing to disclose and obtain consent for recurring charges. Many users were unaware of the weekly fees. NGL also violated the Children’s Online Privacy Protection Act by not verifying user ages, failing to get parental consent, and improperly handling children’s data. The company aggressively marketed to children despite knowing the risks of cyberbullying on anonymous apps.

The FTC order states that the defendants will pay $5 million to settle the lawsuit and will be banned from offering their “NGL: ask me anything” app to users under 18. It also mandates the implementation of an age-gate to block users under 18, the deletion of personal information for users under 13 without parental consent, and prohibits misrepresenting message senders and AI capabilities. Additionally, the order requires the disclosure of recurring charges and obtaining consent before billing, along with providing a simple cancellation mechanism and reminders about recurring charges.

Click here for the press release about the FTC and LA District Attorney’s action.