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TikTok Accused of Operating Unlicensed Money Transmission Business

Summary

TikTok is facing legal scrutiny from multiple U.S. states, which have accused the platform of operating an unlicensed money transmission business through its live-streaming and virtual currency features. This allegation is part of a broader set of lawsuits filed by 14 states and the District of Columbia, claiming that TikTok’s practices not only violate consumer protection laws but also pose risks to the mental health and safety of young users.

The lawsuits, led by attorneys general from states such as California and New York, argue that TikTok’s business model is designed to maximize user engagement, particularly among children, while prioritizing corporate profits over user safety. The specific claims regarding unlicensed money transmission relate to TikTok’s live-streaming feature, which allows users to receive digital gifts in the form of virtual currency, raising concerns about the potential for exploitation of underage users. Additionally, the lawsuits highlight the platform’s failure to adequately protect minors, asserting that TikTok’s features contribute to a harmful online environment that can lead to mental health issues and risky behavior among its young audience.

Legal Claims Against TikTok

  • Unlicensed Money Transmission: The District of Columbia’s lawsuit alleges that TikTok operates an unlicensed money transmission business, which could expose the platform to significant legal penalties.

  • Addictive Features: The lawsuits contend that TikTok’s algorithm is intentionally designed to keep users, especially children, engaged for extended periods, exacerbating issues related to mental health and addiction.

Impact on Young Users

The states argue that TikTok’s practices have serious implications for the well-being of young users. Features such as beauty filters and viral challenges are cited as contributing factors to body image issues and dangerous behaviors. The legal actions aim to hold TikTok accountable for what the states describe as a failure to protect minors from the negative consequences of its platform.

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