Lumos Labs, which markets the Lumosity brain "training" program, has agreed to pay $2 million to settle deceptive ad claims leveled by the Federal Trade Commission.
The judgment is actually $50 million, but that is being suspended due to the lab's financial condition so long as it comes up with the $2 million. But if they misrepresented their financial condition—the FTC wasn't commenting on what that was, but clearly it was that they could not afford that big a financial hit—the rest comes due. The FTC's goal is not to put the company out of commission, said a spokesperson.
Those allegedly deceptive claims, made in TV and radio ads including on CNN, Fox News, History Channel, NPR, Pandora, Sirius XM and Spotify, as well as in emails, blog posts and more, included that the program would "sharpen" their mental performance and prevent cognitive decline.
The company also used Google AdWords to drive traffic to the site, including buying keywords like dementia and Alzheimer’s, according to the FTC complaint.
The FTC claimed the company "deceived" consumers with "unfounded" claims that their games could help users perform better at work and school.
In addition to paying the $2 million in consumer refunds, Lumos Labs has agreed to let subscribers know about the FTC action and give them an easy way to cancel their auto-renewing subscriptions if they choose.
The company sold online and mobile app subscriptions ranging from monthly ($14.95) to lifetime ($299.95) memberships, according to the FTC.
The complaint alleges that Lumosity training claims included that it would "1) improve performance on everyday tasks, in school, at work, and in athletics; 2) delay age-related cognitive decline and protect against mild cognitive impairment, dementia, and Alzheimer’s disease; and 3) reduce cognitive impairment associated with health conditions, including stroke, traumatic brain injury, PTSD, ADHD, the side effects of chemotherapy, and Turner syndrome, and that scientific studies proved these benefits."
The FTC also charged that Lumos Labs did not disclose that some of the testimonials had been solicited through contests that promised substantial prizes like iPads and trips.
The settlement also requires the company, cofounder/former CEO Kunal Sarkar and cofounder/former chief scientific officer Michael Scanlon, "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."
An FTC source said its investigation concluded that the only thing doing the games improved was the ability to do the games, and that there was no evidence that could be generalized to improved brain function overall, or certainly the treatment of any specific disease.
"This decision will allow the company to move on and continue delivering its research-based cognitive training platform to millions of active and future users," Lumos Labs said in a statement following the FTC's disclosure of the settlement.
"Neither the action nor the settlement pertains to the rigor of our research or the quality of the products — it is a reflection of marketing language that has been discontinued. Our focus as a company has not and will not change: We remain committed to moving the science of cognitive training forward and contributing meaningfully to the field’s community and body of research."
"Lumosity has made strong contributions to the scientific community, including our work with the Human Cognition Project initiative. We invest heavily in research and game development to ensure that our products are engaging and provide value to users. The recent peer-reviewed clinical test published in the journal PLOS One is a large, randomized, active-controlled trial of our cognitive training program. The study reported that participants who trained with Lumosity for 10 weeks improved on an aggregate assessment of cognition. Going forward, a key focus of our ongoing research is to build on these studies to better understand how training-driven improvements on tests of cognition translate to performance in participants' everyday lives."