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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 firstname.lastname@example.org, or any other member of the Frankfurt Kurnit Advertising Group or Interactive Entertainment Groups.
Other Advertising Law Alerts
The Truth Will Set You Free: The FTC Provides New Guidance on Consumer Reviews
Late last year, Congress passed the Consumer Review Protection Act, a law designed to stop businesses from using contracts to prevent customers from posting honest reviews about the business.
March 8 2017
FTC Finds “All Natural” Claim Violated FTC Act
The FTC has issued a Final Order against California Naturel, Inc., a seller and marketer of personal care products, finding that the company's "all natural" claims were false and misleading in violation of the FTC Act.
December 15 2016
FTC Policy Statement Focuses on Homeopathic Health Claims
Last week, the Federal Trade Commission issued its new "Enforcement Policy Statement on Marketing Claims for Over-the-Counter (OTC) Homeopathic Drugs," as well as a staff report on a workshop that the Commission held last year on OTC homeopathic drug advertising.
November 28 2016