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Why did Lumosity get in legal trouble?

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asked Jan 5, 2016 in Internet/Online Business by zuulspaceman (37,960 points)
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Lumosity was fined for deceptive trading practices. [1]

 

The popular brain-training app received a $2 million fine by the Federal Trade Commission because they believed Lumosity's development company Lumos Labs falsely advertised the app.

 

According to the director of the FTC, the app preyed on its customers by feeding into their fears of age-based cognitive decline by claiming that the games in the app could stall the effects of diseases such as Alzheimer's, dementia and the like. They also claimed that playing the app's games between 10 and 15 minutes a day could greatly improve many aspects of memory and attention, which could better most aspects of a person's life. The developers had no science to back up these claims in their ads. [2]

 

More specifically in the complaint, Lumosity used AdWords for marketing and targeting individuals that searched for hundreds of keywords such as memory, cognition, Alzheimer's, and dementia. [3]

 

Another part of the complaint was that the company did not disclose that it solicited some testimonials through contests with significant promised prizes like tech items, trips, or a lifetime subscription to the app. [4]

 

The dispute was settled on January 5, 2016, and aside from paying the $2 million fine, Lumosity had to also inform any subscribers that signed up from January 1, 2009 to December 31, 2014 about the dispute and provide an easier method for canceling auto-billing.

 

References:

 

[1] http://www.ubergizmo.com/2016/01/luminosity-fine-2m-by-ftc/

 

[2] https://www.geneticliteracyproject.org/2016/01/07/luminosity-brain-training-games-under-attack-for-false-advertising/

 

[3] http://time.com/money/4168222/lumosity-brain-game-2-million-fine/

 

[4] https://www.ftc.gov/news-events/press-releases/2016/01/lumosity-pay-2-million-settle-ftc-deceptive-advertising-charges

answered Jan 7, 2016 by deviousdesigner (36,530 points)
selected Mar 5, 2016 by zuulspaceman

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