Lumosity Pays Millions in Fines, ‘Deceived Consumers’
As I pointed out nearly four years ago, Lumosity was apparently selling the equivalent of snake oil to unsuspecting folks. The company simply didn’t have the research to back up its grand claims — “improve [your] brain health and performance” — from the company’s inception through early 2015.
The U.S. federal government’s Federal Trade Commission (FTC) finally caught on to the scam, announcing an enormous settlement with the company yesterday.
As noted in the news release about the settlement, the FTC alleges that Lumosity “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.”
But it could have been so much worse.
According to the FTC, “The order also imposes a $50 million judgment against Lumos Labs, which will be suspended due to its financial condition after the company pays $2 million to the Commission.” From this, it sounds as if the company apparently isn’t doing all that well financially. (Which is odd, when you consider it’s raised more than $70 million in funding and generated $24 million in revenues in 2012.)
Here’s what the FTC had to say about what the company did:
“Lumosity preyed on consumers’ fears about age-related cognitive decline, suggesting their games could stave off memory loss, dementia, and even Alzheimer’s disease,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “But Lumosity simply did not have the science to back up its ads.”
In addition to not having the research to back up its claims — “enhance memory, attention and creativity” — Lumosity also failed to disclose the financial arrangements of its consumer testimonials:
The complaint also charges the defendants with failing 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.
I’m pretty sure if I started giving away iPads, I could get people to say a lot of nice things said about Psych Central too!
Lumosity is Unapologetic
Lumosity, for it’s part, was mostly mum about the FTC finding and the $50 million fine. Instead of apologizing for misleading its customers for all of those years (and taking their money in the process), the company’s only note starts off with a thank you:
Thank you for helping us make 2015 an amazing year for Lumosity. With your support, we continue to invest in our products, conduct scientific research, and strive to be on the cutting edge of bringing science and technology together. As you may be aware, we recently settled a Federal Trade Commission inquiry regarding certain advertising language from past marketing campaigns.
Astoundingly, Lumosity also claims the following:
It is important to note that this settlement does not speak to the rigor of our research or the quality of our products.
It does indeed speak to the quality of your company (which, umm, makes your products) that you would knowingly misstate what the research showed at the time. For the first years of the company’s existence, the company had virtually no research on its actual products, instead relying on tasks that were similar (but not identical) to those found in some published research.
But as I noted in 2012, those cognitive tasks were nearly always carried out on older adults, or adults with cognitive deficits. Ethical researchers typically do not generalize from such populations to everyone, knowing the limitations of research methods and design.
Nowhere has Lumosity actually apologized for misleading its customers (at least not that I could find at the time of this writing).
Why I’d Drop Lumosity
If I were a customer of Lumosity, I would give up my membership today. Why? Because in my opinion any company that knowingly engages in marketing deception of this nature — not just for a little while, but for years — is not an ethical company. The executives at Lumosity knew they were stretching what the research actually showed versus what they were claiming, but felt it made for a better and stronger marketing message to gloss over those details. Worse, rather than admit its mistakes, apologize, and ask for forgiveness, the company continues to act as though it did nothing wrong.
We should hold companies to the same ethics we’d hold ourselves to. There’s no place for someone selling “brain games” promising one thing, but delivering something quite different. Lumosity’s research efforts are only just now catching up with its marketing. But for me — and I suspect for most folks — it’s too little, too late.
Federal Trade Commission: Lumosity to Pay $2 Million to Settle FTC Deceptive Advertising Charges for Its “Brain Training” Program
Grohol, J. (2018). Lumosity Pays Millions in Fines, ‘Deceived Consumers’. Psych Central. Retrieved on October 27, 2020, from https://psychcentral.com/blog/lumosity-pays-millions-in-fines-deceived-consumers/