Lumos Labs Fined by FTC Over Brain-Game Claims

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The FTC alleges that Lumos Labs claimed scientific studies proved that using its Lumosity games would delay age-related cognitive decline, reduce impairment associated with strokes and traumatic brain injuries, and improve performance at school and work. PHOTO: ALEX BRANDON/ASSOCIATED PRESS
Austen Hufford austen.hufford@wsj.com

Lumos Labs, the company behind brain-training app Lumosity, will pay $2 million to the Federal Trade Commission to settle allegations it “deceived consumers with unfounded claims” in its advertising.

“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. “But Lumosity simply did not have the science to back up its ads.”

Under the settlement, Lumos Labs didn’t admit or deny the allegations. “Neither the action nor the settlement pertains to the rigor of our research or the quality of the products; it is a reflection of marketing language that has been discontinued,” Lumos Labs said.

The company also will post full-screen notices to users of its mobile app and send emails to subscribers allowing them to opt-out of auto-payments and notifying them of the FTC settlement.

Lumos Labs was fined $50 million but will only pay $2 million because of its financial condition. The regulator said the reduction in payment is conditioned on the accuracy on the company’s submitted financial statements. The FTC sometimes lowers fines depending on the amount of assets controlled.

The FTC alleges the company claimed scientific studies proved that using Lumosity would delay age-related cognitive decline, reduce impairment associated with strokes and traumatic brain injuries, and improve performance at school and work.

The company’s website and mobile apps have more than 50 games that are designed to be played daily to “challenge [five] core cognitive abilities.” The company’s Android app has been downloaded more than 5 million times.

In November, Lumos appointed Steve Berkowitz as its new chief executive, replacing co-founder Kunal Sarkar, who became chairman.