Lumosity to pay $2 million to settle deceptive advertising charges
The creators and marketers of the Lumosity “brain training” program have agreed to pay $2 million to settle Federal Trade Commission charges that they deceived consumers with unfounded claims that the company's games can reduce or delay cognitive impairment associated with age and other serious health conditions, the FTC announced Tuesday. The company, however, said that it continues to stand behind its products.
“Lumosity preyed on consumers' fears about age-related cognitive decline, suggesting their games could stave off memory loss, dementia and even Alzheimer's disease,” Jessica Rich, director of the FTC's Bureau of Consumer Protection, said in a statement. “But Lumosity simply did not have the science to back up its ads.”
The parties had signed the settlement in November, but it was submitted Jan. 4.
The federal complaint, also dated Jan. 4, charges the defendants — the company known as Lumos Labs, co-founder and former CEO Kunal Sarkar and co-founder and former Chief Scientific Officer Michael Scanlon — with failing to disclose that some consumer testimonials featured on the Lumosity website had been solicited through contests that promised “significant prizes,” including an iPad, a lifetime Lumosity subscription and a round-trip to San Francisco.
As part of the settlement, Lumos Labs will notify subscribers who signed up for an auto-renewal plan between Jan. 1, 2009, and Dec. 31, 2014, of the FTC action and provide them with an easy way to cancel their auto-renewals to avoid future billing.
A proposed stipulated federal court order, which has the force of law when signed by the district court judge (in this case, in the U.S. District Court for the Northern District of California, San Francisco Division), imposes a $50 million judgment against Lumos Labs. That judgment will be suspended due to the company's financial condition after it pays $2 million to the commission. The order also requires the company and the individual defendants to have “competent and reliable scientific evidence” before making future claims about any benefits for real-world performance, age-related decline or other health conditions.
In a letter to subscribers posted on its website, Lumosity said it decided to settle the case so the company could focus on delivering its products to its more than 70 million members and on promoting innovation within the field of cognitive training. “It is important to note that this settlement does not speak to the rigor of our research or the quality of our products,” the letter reads. “We proudly stand behind the Lumosity product that millions of our members train with each month.”