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January 11th, 2016
Still Paying Attention: FTC Extracts $2M Settlement from Brain Game Company
In a follow-up to its settlement with Focus Education, LLC in January of last year, the FTC recently entered into a $2 million settlement with Lumos Labs over claims that advertising and marketing for its Lumosity "brain training" games misled customers about cognitive benefits.
The FTC's complaint alleged that Lumos Labs' marketing campaign deceptively suggested that playing its games 5 - 10 minutes a few times a week could lead to mental benefits, including: delaying memory decline, protecting against dementia and Alzheimer's disease, improving school, work, and athletic performance, and reducing the effects of such things as ADHD and post-traumatic stress disorder. However, according to the FTC's allegations, Lumos Labs did not have sufficient scientific data to back up these hard-hitting performance claims. The FTC also asserted that Lumos Labs' failed to disclose to the public that many consumer testimonials had been solicited as part of a contest that offered users the chance to win valuable prizes.
As part of the settlement, Lumos Labs must pay $2 million and also notify and provide customers with an easy way to cancel any auto-renewal subscriptions. The settlement also includes injunctive provisions against any future misrepresentations, and provisions requiring human clinical testing before certain cognition claims may be made.
This case should be another reminder to game developers, game publishers, advertisers and agencies that video games and apps are very much on the FTC's radar. Game developers and game publishers should be mindful not to make overreaching claims about what their games can do. Any efficacy statements must be correct, truthful and backed by sufficient scientific research. Moreover, game developers, game publishers, advertisers and agencies must consider how they are soliciting testimonials from the public and how they are describing their relationships with the people providing the testimonials. Many of the FTC's recent FAQ's have specifically discussed video games and how advertising and marketing requirements apply to them.
If you have any questions about this latest enforcement action, or about other advertising or interactive entertainment matters, please contact Sean F. Kane at (212) 705-4845 or email@example.com, or any other member of the Frankfurt Kurnit Advertising Group or Interactive Entertainment Groups.
Other Advertising Law Alerts
What the Advertising Industry Can Learn from Kim Kardashian’s Settlement with the SEC
On October 3, 2022, the Securities and Exchange Commission (SEC) announced that it entered into a $1.26 million settlement with Kim Kardashian over her social media promotion of the EMAX token without disclosing payment she received from token issuer, EthereumMax. The matter provides important lessons for advertisers. Read more.
October 10 2022
Get Ready for California’s New “Automatic Renewal” Rules
California recently amended its Automatic Purchase Renewals law. The amended statute - effective July 1st -- require marketers to provide consumers of automatic renewal or continuous service offers with more information and easier ways to terminate. Read more.
June 22 2018
“Made in the U.S.A.” Claims Continue to be Scrutinized
In 2016, California amended Section 17533.7 of the California Business and Professions Code ("Section 17533"), liberalizing the standard for selling products labeled "Made in U.S.A" to California consumers. Read more.
June 4 2018