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January 11th, 2016
Still Paying Attention: FTC Extracts $2M Settlement from Brain Game Company
In a follow-up to its settlement with Focus Education, LLC in January of last year, the FTC recently entered into a $2 million settlement with Lumos Labs over claims that advertising and marketing for its Lumosity "brain training" games misled customers about cognitive benefits.
The FTC's complaint alleged that Lumos Labs' marketing campaign deceptively suggested that playing its games 5 - 10 minutes a few times a week could lead to mental benefits, including: delaying memory decline, protecting against dementia and Alzheimer's disease, improving school, work, and athletic performance, and reducing the effects of such things as ADHD and post-traumatic stress disorder. However, according to the FTC's allegations, Lumos Labs did not have sufficient scientific data to back up these hard-hitting performance claims. The FTC also asserted that Lumos Labs' failed to disclose to the public that many consumer testimonials had been solicited as part of a contest that offered users the chance to win valuable prizes.
As part of the settlement, Lumos Labs must pay $2 million and also notify and provide customers with an easy way to cancel any auto-renewal subscriptions. The settlement also includes injunctive provisions against any future misrepresentations, and provisions requiring human clinical testing before certain cognition claims may be made.
This case should be another reminder to game developers, game publishers, advertisers and agencies that video games and apps are very much on the FTC's radar. Game developers and game publishers should be mindful not to make overreaching claims about what their games can do. Any efficacy statements must be correct, truthful and backed by sufficient scientific research. Moreover, game developers, game publishers, advertisers and agencies must consider how they are soliciting testimonials from the public and how they are describing their relationships with the people providing the testimonials. Many of the FTC's recent FAQ's have specifically discussed video games and how advertising and marketing requirements apply to them.
If you have any questions about this latest enforcement action, or about other advertising or interactive entertainment matters, please contact Sean F. Kane at (212) 705-4845 or email@example.com, or any other member of the Frankfurt Kurnit Advertising Group or Interactive Entertainment Groups.
Other Advertising Law Alerts
New Low-Budget Waiver is Now Available for Digital Commercial Productions
Advertisers and agencies that are signatories to the SAG-AFTRA Commercials Contract can now take advantage of a new waiver issued by SAG-AFTRA and the Joint Policy Committee on Broadcast Talent Union Relations when producing low-budget digital commercials.
November 10 2017
FTC Updates Endorsement Guide FAQs and Settles First-Ever Action Against Individual “Influencers”
Recent developments demonstrate the FTC's continued interest in social media endorsements.
September 11 2017
FTC Announces Reforms to Its Investigative Process
Recently, the FTC announced a set of internal reforms intended to improve the process by which the Commission investigates unfair, deceptive and fraudulent business practices. The reforms relate to the Civil Investigative Demands ("CID") that the FTC's Bureau of Consumer Protection issues to request information from investigation targets.
September 7 2017