The Northern District of California District Court has ordered Lumos Labs, Inc., the creators of the Lumosity “brain training” program, to pay the Federal Trade Commission (FTC) $2 million to settle charges alleging unfair or deceptive acts or practices and false advertisement.
The FTC alleged that Lumosity advertised false and unsubstantiated claims to improve work, school and athletic performance, treat “age-related decline in memory or other cognitive” impairments such as dementia and Alzheimer’s disease, and that it reduced cognitive impairment caused by Turner Syndrome, PTSD, and ADHD.
The order enjoined Lumosity from advertising such misleading statements, unless they were made on reliance of scientific evidence to substantiate its claims. The order required the scientific evidence to include controlled human clinical testing performed by qualified researchers.
The order imposed a $50 million judgement, but required only $2 million. The court suspended the remainder after reviewing Lumosity’s financial statements and tax returns from 2012, 2013 and 2014. The order also required Lumosity to provide timely notice to all subscribers that clearly and conspicuously displays a one-step process to cancel an auto-renewal account.
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The court also imposed a compliance monitoring provision, requiring Lumosity to maintain all records and any human clinical testing and report to the Commission for 10 years.
Lumosity had been highly advertised on TV, radio, and streaming online advertisements. It was also marketed through emails, social media, and other websites and used Google AdWords to increase traffic to its website. The company purchased hundreds of keywords related to memory, cognition, dementia, and Alzheimer’s disease, according to the FTC complaint.
The FTC also alleged Lumosity solicited customer testimonials through contests offering prizes such as a free IPad, trip to San Francisco, and lifetime memberships. The membership process ranged from a monthly fee of $14.95 to a lifetime membership for $299.95.
“Lumosity preyed on consumers’ fears about age-related cognitive decline, suggesting their games could stave off memory loss, dementia, and even Alzheimer’s disease,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “But Lumosity simply did not have the science to back up its ads.”
The case is Federal Trade Commission, Plaintiff, v., Lumos Labs, Inc., a corporation, doing business as Lumosity, and Kunal Sarkar and Michael Scanlon, case number 132 3212 3:16-cv-00001 in the U.S. District Court Northern District of California.