FTC Hits Lumosity With Fine for Deceptive Brain Health Ads | WIRED
You’ve probably seen or heard ads for the brain training app Lumosity boasting that its games were designed by neuroscientists and were scientifically proven to help stave off Alzheimer’s as well as improve real-world cognitive performance. Well, you won’t be seeing those ads anymore. Lumosity maker Lumo Labs are now banned from making such claims as the result of a multimillion-dollar settlement with the Federal Trade Commission, the agency said today.
Launched in 2007, Lumosity offers over 50 different games designed to improve cognitive skills such as attention and memory. You can play some of the games for free; Lumo Labs sells access to the full suite of games, which can be played either on the web or via mobile apps, for $5 to $15 per month. Although Lumosity wasn’t the first to offer “brain training” games to the public, it became the most famous thanks in large part to an aggressive advertising campaign touting its effectiveness at everything from boosting grades to improving athletic performance. The problem is, according to the FTC, those claims aren’t actually backed up by science.
The company failed to disclose that many of its testimonials were solicited as part of a contest that offered winners prizes such as iPads or a free trip to San Francisco.
The FTC’s complaint alleges that Lumo Ads misled customers with false or deceptive advertising, and that the company had failed to disclose that many of its testimonials had been solicited as part of a contest that offered winners prizes such as iPads, lifetime subscriptions to Lumosity, or a free trip to San Francisco.
Lumo Labs and its employees and representatives are now banned from making claims that Lumosity and related products improve academic or athletic performance, stave off dementia or other cognitive disorders, or treat other conditions such as attention deficit disorder (ADHD) or post-traumatic stress disorder (PTSD) until the company can back those claims with “competent and reliable scientific evidence.”
The order defines competent and reliable scientific evidence as clinical testing conducted by qualified researchers with adequate controls “considered in light of the entire body of relevant and reliable scientific evidence.”
As part of the settlement, the FTC fined Lumo Labs $50 million but is suspending all but $2 million of that fine because the company probably couldn’t pay. (Lumo Labs did not respond to WIRED’s request for comment.) The company must also notify all current Lumo Labs subscribers of the FTC’s order and provide them with a link to an easy way to unsubscribe from the service.
Go Back to Top. Skip To: Start of Article.Yelp dodged another legal bullet last week when a federal judge in San Francisco threw out the latest lawsuit against the company. This time around, shareholders claimed that Yelp had artificially inflated its share values by exaggerating the reliability of its reviews.
Judge Jon Tigar dismissed the case, saying that reasonable investors would understand that not all of Yelp’s reviews are authentic, Reuters reports. In particular, the judge pointed to Yelp’s admission that its screening technology is imperfect. Judge Tigar had already dismissed a previous version of the case in April.
Many small business owners have claimed that they’ve been plagued by negative reviews after declining to advertise on Yelp. The allegations have haunted Yelp for years, but so far, none of them has resulted in a successful lawsuit against the company. Yelp has always maintained that it does not manipulate reviews based on advertising relationships or any other financial arrangement, But the company used to allow advertisers to highlight a “favorite review” atop its listing, which could effectively push negative reviews further down the page.
A group of small businesses filed a suit against Yelp in 2010, claiming that the company’s ad sales practices amounted to extortion. But an appeals court threw the case out last year, arguing that the plaintiffs had failed to prove that Yelp had fabricated negative reviews and that the company’s strategy of allowing advertisers to re-prioritize reviews is “hard bargaining” but not extortion. Yelp stopped offering the “favorite review” option to advertisers after the lawsuit was filed.
The latest suit was prompted by a Wall Street Journal story published in April 2014 that revealed the Federal Trade Commission had received 2,046 complaints about Yelp. The FTC ultimately closed its investigation without taking any action, according to a company blog post last January. After the Wall Street Journal story ran, Yelp’s stock dropped 18 percent.
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