Lumosity Settles $2M for Failing to Back Ads With Science
The FTC has often been the public consumer protection outfit that helps people take down companies making absurd claims about their products or services. One of the more famous FTC takedowns was of L'Oreal, which had claimed that products in its Genefique and Paris Youth Code lines essentially were the keys to youth by unlocking proper gene expression.
The latest company to feel the FTC's wrath, Lumosity, settled with the federal agency to the tune of $2 million because it failed to back up its brain-training program claims with "sound, scientific research."
Lumosity's "Brain Training"
If you're one of those who've seen the Lumosity ads between Youtube ads, you'll know the pain of having to be assaulted with the chirpy, cloying testimonials about how the company's "Brain Training" games freshen up the mind. Lumosity sells monthly and annual subscriptions that allow users to play their games which have been touted by the company as even delaying memory loss and keeping Alzheimer's Disease in check.
Puffery or False Advertising?
Standard business practices have long recognized the tactic of puffery -- exaggerated and laudatory self-praise not reasonably taken as factually reliable -- and flat out lying. Compare "America's Most Trusted Brand" against "100 percent Made in America." One statement can be verified while the other can be taken with a grain of salt.
"Preyed on Consumers' Fears"
In Lumosity's case, the FTC's major grievance was that health claims of the type made by Lumosity were not backed up by "sound, scientific research." Jessica Rich, the director of the FTC's Bureau of Consumer Protection even said that Lumosity "preyed on consumers' fears about age-related cognitive decline."
In order to make such health-related claims, the FTC generally requires the claim be backed up by a randomized clinical study with human test subjects. In other words, rats and rabbits won't do.
Investigation into Lumosity's case also suggested that players of Lumosity's games simply improved their performance in the game itself -- having nothing to do with real world application. A good analogy would be getting better and better at playing pool through exposure and practice. But does this delay memory loss? If so, the FTC requires you back it up with scientific research.
As far as in-house counsel should be concerned, they should ensure that all claims associated with their goods or services do not pass over the thin line delineating puffery and false or misleading advertising. Seeking the advice of outside experts is suggested.
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