Photo messenger alleged to have collected customer data and failed to secure mobile numbers and usernames.
Snapchat has agreed to be monitored for 20 years as part of its settlement with US regulators on charges of violating users’ privacy.
The photo messenger was accused by the Federal Trade Commission (FTC) of deceiving customers by promising them that their shared photos would be deleted after a certain period of time.
FTC chair Edith Ramirez said: "If a company markets privacy and security as key selling points in pitching its service to consumers, it is critical that it keep those promises."
Recipients were able to save the photos indefinitely, according to the regulator, by using third party apps to log into the messenger.
Snapchat was also accused of gathering personal data of users without their knowledge, their mobile phone numbers being used to extract details from their contacts list.
A statement from FTC said that when iOS users entered their phone number to find friends, Snapchat collected the names and phone numbers of all the contacts in their mobile device address books.
"Snapchat continued to collect this information without notifying or obtaining users’ consent until Apple modified its operating system to provide such notice with the introduction of iOS 6," the commission said said.
Meanwhile, in a blogpost on its website, Snapchat said, "We learned a lot during those early days. One of the ways we learned was by making mistakes, acknowledging them, and fixing them.
"While we were focused on building, some things didn’t get the attention they could have."
The mesenger was also rebuked for its failure to secure its Find Friends feature, resulting in a security breach wherein hackers stole 4.6 million usernames and phone numbers.