A bipartisan group of more than a dozen state attorneys general is filing lawsuits on Tuesday against social media giant TikTok, with one complaint accusing the company of deceiving users by claiming that its app is safe for children, despite its addictive features, and for allegedly operating an unlicensed money transmission business.
The states filing suit include New York and California, as well as the District of Columbia.
“Our lawsuit is seeking to hold TikTok accountable for harming D.C. children” said Attorney General Brian Schwalb of the District of Columbia, in an interview with CNBC.
Schwalb’s suit alleges a slew of “profound” mental health risks are posed to teens and children by compulsive TikTok use, including depression, anxiety, sleep loss and body dysmorphia.
Schwalb called the app — which allows users to create, share and view short-form videos — “digital nicotine,” and said that TikTok is “intentionally trying to addict young people to its platform.”
He said the app “inflicts immense damage on an entire generation of young people.”
“In addition to prioritizing its profits over the health of children, TikTok’s unregulated and illegal virtual economy allows the darkest, most depraved corners of society to prey upon vulnerable victims,” Schwalb said. “The company knows what is happening and has chosen to ignore it. This lawsuit seeks to put an end to its illegal, deceptive, and predatory behavior.”
CNBC has requested comment from TikTok on the lawsuits.
More than half of young people between 13 and 17 years old in the U.S. use the app. Worldwide, TikTok has more than a billion active users.
Schwalb’s lawsuit, which alleges violations of D.C. consumer protection laws, accuses TikTok of “employing algorithms and manipulative design features” to hook young users by triggering bursts of dopamine to their impressionable brains.
“TikTok knows that its design features make its App more addictive and keep users engaged for longer,” the suit in D.C. Superior Court alleges.
“While this may be good for business, it has perilous effects on children.”
The complaint also says that in 2019, the company introduced “two new dangerous features”: a live-streaming feature called TikTok LIVE and a virtual currency system called TikTok “Coins.”
“TikTok stands out with its use of Coins — an unlicensed virtual currency,” the suit alleges. “Users buy Coins to send virtual ‘Gifts’ during LIVE sessions, which streamers can cash out for real money. TikTok incentivizes users to go LIVE by promising these monetary rewards ‘the more popular [their] content becomes.'”
The suit says that TikTok “earns substantial revenue” from its Coins, charging commissions of up to 50% on each transaction.
The app’s virtual currency cash-in and cash-out process is “a virtual money transmission system” that ignores D.C. law by failing to obtain a required money transmitter license, the suit alleges.
And, “Although LIVE, including both live streaming and Gifts, has a current minimum age…
Read More: TikTok sued over teen addiction, virtual currency