Lumosity to Pay $2 million in Redress for Deceptive Brain-Training Programs
Lumosity customers will be getting a refund and an easy way to cancel their auto-renewal subscription as part of a settlement between the company and the Federal Trade Commission (FTC).
Lumos Labs, the makers of the brain training program, will pay $2 million in redress and provide users with an easy way to cancel their auto-renewal to avoid future billing. The company is also barred from making claims about the affect its games have on the brain unless those claims can be backed by reliable scientific evidence.
The Lumosity program consists of 40 games that are said to target and train specific areas of the brain. The company advertised that using the games for 10 to 15 minutes three to four times a week could help users improve their performance doing everyday tasks, delay age-related cognitive decline, and reduce cognitive impairment due to disease or medical conditions.
Options for online and mobile subscriptions rages from about $15 monthly to about $300 for a lifetime membership. Lumosity was widely promoted on major TV and radio stations, on social media, and through online keyword searches. Specifically, the company used Google AdWords to drive traffic to their website, purchasing hundreds of keywords related to memory, cognition, dementia, and Alzheimer's disease.
The complaint also charges that the company failed to disclose that some consumer testimonials featured on the website had been solicited through contests that promised significant prizes, including a free iPad, a lifetime Lumosity subscription, and a round-trip visit to San Francisco.
The proposed court order requires that the company, and co-founders Kunal Sarkar and Michael Scanlon have 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.
The order also imposes a $50 million judgement against Lumos Labs, which will be suspended due to the company's financial condition after it pays $2 million in redress. Customers who signed up for an auto-renewal plan between January 1, 2009 and December 31, 2014 will be notified about the FTC settlement and a way to cancel their subscription.