FTC to Lumos: Our Substantiation Standards Ain't a Game

The Federal Trade Commission (FTC) is continuing to pursue unsubstantiated health claims and developers of healthcare-related mobile applications and other technologies need to be wary. In its latest example, the FTC announced on January 5, 2016, that Lumos Labs, Inc. (Lumos), the creators and marketers of the Lumosity "brain training" program, agreed to settle charges alleging that they deceived consumers with unfounded claims that Lumosity games can help users perform better at work and in school, and reduce or delay cognitive impairment associated with age and other serious health conditions.

The FTC assessed $50 million in equitable monetary relief against the company, however, this penalty was suspended due to the company's financial condition, resulting in Lumos agreeing to pay $2 million. The Commission vote authorizing the filing of the complaint and proposed stipulated order was 4-0.

The settlement comes at a time when the FTC continues its focus on misleading health advertising through its membership in the National Prevention Council, which provides coordination and leadership at the federal level regarding prevention, wellness, and health promotion practices. The FTC seems to be increasingly focused on health-related apps, games, and related software products designed for cognitive or mental issues, entering into a Consent Decree last year with Focus Education, LLC, based on Attention Deficit Hyperactivity Disorder (ADHD) improvement claims the company made about an educational software game known as the "ifocus System."

The US Food and Drug Administration (FDA) is also becoming more active in its oversight and regulation of health-related apps, games, and related software products, issuing a Warning Letter for an ADHD software program in August 2015.

The Lumosity program consists of 40 games purportedly designed to target and train specific areas of the brain, according to the FTC's complaint. The FTC recognized that Lumos engaged in widespread marketing of Lumosity though TV and radio advertisements on networks including CNN, Fox News, the History Channel, National Public Radio, Pandora, Sirius XM, and Spotify; emails, blog posts, social media, and on their website, Lumosity.com; and Google AdWords to drive traffic to their website, purchasing hundreds of keywords related to memory, cognition, dementia, and Alzheimer's disease.

The company advertised that training on these games for 10 to 15 minutes three or four times a week could help users achieve their "full potential in every aspect of life." The company sold both online and mobile app subscriptions, with options ranging from monthly ($14.95) to lifetime ($299.95) memberships. The FTC alleged in its complaint, attaching various website screenshots and images, that Lumos claimed that training with Lumosity would:

1. Improve performance on everyday tasks, in school, at work, and in athletics.
2. Delay age-related cognitive decline and protect against mild cognitive impairment, dementia, and Alzheimer's disease; and
3. Reduce cognitive impairment associated with health conditions, including stroke, traumatic brain injury (TBI), post-traumatic stress disorder (PTSD), attention deficit hyperactivity disorder (ADHD), the side effects of chemotherapy, and Turner syndrome, and that scientific studies proved these benefits.

The complaint also maintained that Lumos failed to disclose that some consumer testimonials featured on the website "had been solicited through contests that promised significant prizes, including a free iPad, a lifetime Lumosity subscription, and a round-trip to San Francisco." The FTC considers such solicitations to be "material connections" that must be disclosed in the context of a testimonial. As part of the settlement, Lumos and all agents acting directly or indirectly on behalf of the company must disclose such relationships or the receipt of prizes.

As part of the settlement, Lumos must also notify subscribers who signed up for an auto-renewal plan between January 1, 2009 and December 31, 2014 of the FTC action, using specific FTC-agreed upon language, and provide them with an easy way to cancel their auto-renewal to avoid future billing. Additionally, Lumos must post the same FTC-agreed upon notification language on its website and mobile app. Lumos must also provide the FTC with a list of such customers, including name, email address, type of subscription and other information.

In addition to the financial penalties, Lumos must have "competent and reliable scientific evidence" before making future claims about any benefits for real-world performance, age-related decline, or other health conditions. The FTC generally defines "competent and reliable evidence" to mean "tests, analyses, research, studies, or other evidence based upon the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results." In the context of health-claims, the FTC generally considers the competent and reliable scientific standard to require randomized controlled clinical trials on the product (or a substantially similar product). Anecdotal evidence generally would not satisfy this standard (e.g., observations, consumer preference survey data, etc.).

In announcing the settlement, FTC Commissioner Julie Brill issued a separate concurring statement to voice her "strong support for this action" and to express her "concerns regarding the marketing of brain training programs going forward." Specifically, she "caution[ed] Lumosity and other companies about making representations that overstate the benefits of these products or misleadingly imply that improvements in the game setting transfer to real-world benefits." She reiterated that Section 5 of the FTC Act requires that advertisers have a reasonable basis to support their express and implied advertising claims before they are disseminated to ensure that such claims are truthful and non-deceptive (citing FTC Policy Statement Regarding Advertising Substantiation).

Further, Commissioner Brill asserted that advertisers "must also have rigorous, scientific support to substantiate claims for products that purport to prevent or treat health or disease-related conditions. Because claims that indicate scientific support can easily imply to consumers greater health benefits than are actually the case, companies marketing brain training products should carefully evaluate their advertising to make sure consumers do not take away a stronger efficacy message than scientific evidence supports." (citing POM Wonderful, LLC v. FTC, 777 F.3d 478, 493-94 (D.C. Cir. 2015); FTC v. Direct Marketing Concepts, et. al., 624 F.3d 1, 9-11 (1st Cir. 2010). See also In the Matter of Focus Education, LLC, No. 122 3153 (F.T.C. April 9, 2014).

These statements demonstrate that the FTC will pursue aggressively misleading health claims made by companies, particularly those in the cognitive or mental health area, where consumers may be more vulnerable to promises of clinical improvement. Companies, especially those operating in the healthcare space, are on notice that it is essential to have competent and reliable evidence to support any express or implied claims about such products.