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I'm sorry but this article is BS and it's associated "source" seems to be a SEO stuffing website and smells very much like it was written by AI.

Is there any actual evidence that this is happening? This NYPost article and their "source" material seems to be the only things that reference such a practice.

Some quick googling does seem to lend at least some basic credibility: https://www.reddit.com/r/Tiktokhelp/s/Y4RCSS6jqk
I was searching mostly under the News section of google although this seems to just be a Tiktok feature "restricted mode" that Tiktok may have accidentally enabled for some users?

Regardless the article is pretty misleading...

This sounds like using whatever API is provided for "make sure the correct user is present", rather than doing "here's a text field, please enter your password". Only that second one would really be concerning.