Facts

The Federal Trade Commission filed a complaint against Lumos Labs Inc. d/b/a Lumosity, and Kunal Sarkar and Michael Scanlon, individually and as officers of the company for alleged violations of the FTC Act.

PLAINTIFF'S CONTENTIONS:
The FTC alleged unfair or deceptive acts or practices and false advertisements in connection with Lumosity's so-called brain-training program. Defendants claimed and marketed Lumosity as a program that could improve performance at work, school and in other settings, stave off age-related cognitive decline, dementia, and Alzheimer's disease, and treat the effects of other conditions like ADHD and PTSD.

DEFENDANTS' CONTENTIONS:
Defendants denied the allegations.

Result

The parties settled. As part of the settlement, defendants were, among other things, permanently enjoined from making any representations about the benefits of Lumosity without competent and reliable scientific evidence to substantiate the claims. Lumosity also agreed to refrain from misleading use of testimonials in its marketing. In addition, Lumos Labs will pay $50 million in damages suspended to $2 million to the FTC for consumer refunds and will notify its customers of the FTC action so that they can cancel their auto renewal and avoid future billing.