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Advertisers must limit their claims by law. They can't just say a certain snake oil will cure all ills without any evidence to support it. When they do, the advertiser pays. Lumosity, a company that claims to transform science into games, was advertising the preventative health powers of its gaming products and caught the attention of the Federal Trade Commission's Bureau of Consumer Protection.
The company has settled with the agency and will pay consumers $2 million. It also owes a $50 million penalty, which has been suspended because it cannot pay, and the company is barred from continuing to claim that its games stave off dementia and dementia and Alzheimer's disease.
FTC on Lumosity Claims
"Lumosity preyed on consumers' fears about age-related cognitive decline, suggesting their games could stave off memory loss, dementia, and even Alzheimer's disease," Jessica Rich, Director of the FTC's Bureau of Consumer Protection, said in a statement announcing the settlement. But the company's research didn't back up the claims they were making, and the company charged customers $15 per month or $300 for a lifetime subscription based on those fears.
Other Prohibitions on Lumosity
According to a report on the settlement in Consumerist, the company also faces the following prohibitions:
1. Lumosity is no longer allowed to make claims that using their games improves cognitive ability to increase performance or helps stave off damage from phyiscal, age-related, or psychological illnesses that can affect thinking and memory, such as Alzheimer's disease, Turner syndrome, or post-traumatic stress disorder.
2. The company can only make claims based on scientific research performed by qualified professionals and that is completely randomized, blinded, and independent from the company itself.
3. Lumosity and its representatives can't use "clinically proven."
4. If Lumosity's claims about improved thinking and memory are true, that would make their game a drug, and subject to approval and regulation by the Food and Drug Administration. Unless they want FDA scrutiny, they will need to rethink their whole brand.
5. Lumosity solicited testimonials through a contest offering prizes like a lifetime subscription to the service, or a trip to San Francisco. That is not allowed.
If you are a Lumosity game subscriber, you should receive news of the settlement in the mail soon, along with notice on how to end auto-renewing subscriptions.