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Government The Almighty Buck Games

Brain Game Maker Lumosity Fined $2 Million For False Advertising (sciencemag.org) 70

sciencehabit writes: Lumos Labs, the company that produces the popular 'brain-training' program Lumosity, yesterday agreed to pay a $2 million settlement to the Federal Trade Commission (FTC) for running deceptive advertisements. Lumos had claimed that its online games can help users perform better at work and in school, and stave off cognitive deficits associated with serious diseases such as Alzheimer's, traumatic brain injury, and post-traumatic stress.

The $2 million settlement will be used to compensate Lumosity consumers who were misled by false advertising, says Michelle Rusk, a spokesperson with the FTC in Washington, D.C. The company will also be required to provide an easy way to cancel auto-renewal billing for the service, which includes online and mobile app subscriptions, with payments ranging from $14.95 monthly to lifetime memberships for $299.95. Before consumers can access the games, a pop-up screen will alert them to the FTC's order and allow them to avoid future billing, Rusk says.

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Brain Game Maker Lumosity Fined $2 Million For False Advertising

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  • I noticed that it is one of the highest rated apps in the iTunes store. 70 million installs. $11 a month. That is like a billion dollars a month*! * I don't use Lumosity.
    • by Anonymous Coward

      You don't need to pay to download it. 70 million installs could = $0. The reality is somewhere in the middle.

      • But if only 1 million people pay at $11 a month, a 2 Million dollar fine is peanuts, it always astounds me how companies get fined so little relative to there income, and the amount they swindle, and individuals get fined so much (relatively speaking)

        • by mysidia ( 191772 )

          But if only 1 million people pay at $11 a month, a 2 Million dollar fine is peanuts

          2 out of 11 million = 18% of your revenue is NOT peanuts.

          Also, do keep in mind, they likely have at least a couple million or so in business expenses for that many customers, so $2M would be more like 25% of their revenue.

          As for their profit.... better subtract out the $2M in expenses, and 35% = $3.15 Million in taxes on the whole $9 million, Because the dollar amount of fines and penalties are a portion that is a

          • you're assuming they have no cash reserves, rainy day fund, legal war chest or whatever you want to call it. I think that's pretty unlikely, if for no other reason than this investigation has been going on for some time and it would have been prudent to sock away some funds in case the outcome was bad.
  • by Hussman32 ( 751772 ) on Tuesday January 05, 2016 @08:02PM (#51244815)

    It seems as though the plaintiffs became smart enough to realize it's possible to use the legal system to enrich themselves. Was it the game that did it?

    • I believe the brain is in need of exercise as much as a muscle, in that the people who remain mentally agile into old age are the ones who continue to challenge their minds with problem solving.

      Luminosity, reading, puzzle solving, posting intelligently... everything helps.

      Stagnation is the great killer.

      • by Anonymous Coward

        That or people with good minds seek out challenges.

      • "reading, puzzle solving, posting intelligently"

        So, a lot like reading /. Reading, of course; puzzle solving such as "what does TFS have to do with the article?"; posting intellige...

        nm

      • by mysidia ( 191772 )

        Luminosity, reading, puzzle solving, posting intelligently... everything helps.

        Stagnation is the great killer.

        Are you sure that you have not reversed the causal direction?

        People who are not mentally agile in old age tend to have a lack of interest or lack of ability to have fun reading, puzzle solving, luminosity, and posting intelligently, therefore, they tend to not engage in those activities --- leaving mostly only people who are mentally agile to do those things.

        • Are you sure that you have not reversed the causal direction? People who are not mentally agile in old age tend to have a lack of interest or lack of ability to have fun reading, puzzle solving, luminosity, and posting intelligently, therefore, they tend to not engage in those activities --- leaving mostly only people who are mentally agile to do those things.

          Consider it at a selfish gene level. [wikipedia.org]

          Old folks who remain actively important to the preservation of their family lines are worth (sometimes) scant resources not for their physical contributions.

      • I believe the brain is in need of exercise as much as a muscle, in that the people who remain mentally agile into old age are the ones who continue to challenge their minds with problem solving.

        Luminosity, reading, puzzle solving, posting intelligently... everything helps.

        Stagnation is the great killer.

        Its the mental version of blaming one's physical problems on the person with the physical problem. If you didn't exercise your brain, its your fault if you get Alzheimer's.

        Sounds good, but probably puts the solution before the problem. Cognitive decline is often very slow and subtle, so people might be not excercising their brains earlier on, because they are somewhere in the middle of that slow decline.

        Its like the people I know who think that retirement is the great killer because people die after ret

      • by tlhIngan ( 30335 )

        I believe the brain is in need of exercise as much as a muscle, in that the people who remain mentally agile into old age are the ones who continue to challenge their minds with problem solving.
        Luminosity, reading, puzzle solving, posting intelligently... everything helps.

        Stagnation is the great killer.

        Correct, the brain is a "use it or lose it", however, the problem is Luminosity was making specific claims that their training helps you be more mentally agile and can reverse aging.

        The science on "brain trai

      • Stagnation is the great killer.

        Much like fear...

        I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration.

  • Really? (Score:5, Interesting)

    by ltrand ( 933535 ) on Tuesday January 05, 2016 @08:08PM (#51244847)
    Wait, let me get this straight, you can sell herbal supplements with the same claim and weak/non-existent scientific support and be in the clear, but this is worthy of a fine? Or how about selling "unlimited" data plans that are explicitly NOT unlimited, and not be hit with false advertising either?

    Oh, wait. I forgot what country this was. They probably didn't give the right bribes out to be in the clear. NM, nothing to see here.
    • Re:Really? (Score:5, Insightful)

      by lucm ( 889690 ) on Tuesday January 05, 2016 @08:18PM (#51244881)

      Wait, let me get this straight, you can sell herbal supplements with the same claim and weak/non-existent scientific support and be in the clear, but this is worthy of a fine? Or how about selling "unlimited" data plans that are explicitly NOT unlimited, and not be hit with false advertising either?

      It's like complaining about someone finding a cure for lung cancer while liver cancer still kills people.

      Those apps that prey on people's quest for better health are a shame and it's a good thing if they get fined. There are other crooks out there but let's celebrate the victories, not use them to promote vague accusations of bribery.

    • by mysidia ( 191772 )

      you can sell herbal supplements with the same claim and weak/non-existent scientific support and be in the clear

      The difference is food/supplements/medical are the FDA, and consumer products are FTC.

      And if the FDA truly cracked down on all products with only weak scientific support, perhaps a number of the major pharmaceuticals could no longer be sold.

      Personally, I think this system is not working, and manufacturers of all products should be required to back up the claims of all benefits and c

      • Does that mean someone should prove that deoderant turn women into sex hungry idiots in you presence or that that soda makes you young cool and living an exciting life?
        How about that SUV purchase that suddenly makes you an outdoor adventurer?

        I would suggest someone stood on the wrong toes here.. Most likely by not wording things just right.. Or not having enough lawyers and/or the right campaign contributions.

        Welcome to the good old USA where it's perfectly OK to fake people out of their money so long as yo

        • Welcome to the good old USA where it's perfectly OK to fake people out of their money so long as you slither between the rules just right. It's called progress didn't you know ;)

          Well, the UK has a more sensible system with an industry regulator who's usual sanction is to just ban the ad rather than enrich lawyers with huge settlements, and the criteria is whether it is likely to mislead the target audience. The ad for this app would get banned pretty quickly (provided someone complained) without the need for a lawsuit.

          In the UK ads, energy drinks still cause biologically and aerodynamically unfeasible mutations, deodorants still cause you to be mobbed by attractive members of the

          • the wrinkle cream ads are always very carefully worded and cite some (highly unscientific and subjective) survey for which the results could presumably be produced on demand.

            They're generally along the lines of "85% of the 70 women we asked said that X cream improved the appearance of their skin". Well yes, and if I wash my face with water it does too.

    • I'm not in the US but does this represent a precedent for class action over misleading claims?

      Because politicians make all sorts of misleading claims in the run-up to elections. And there's no such thing as a poor politician. Just sayin'.

  • Someone with a very smart brain made millions off stupid people. What could be smarter than that
    • Getting away with it...

      • by ewibble ( 1655195 ) on Tuesday January 05, 2016 @08:50PM (#51245035)

        They did get away with it, https://gigaom.com/2013/01/31/... [gigaom.com]
        give me $24 Mil in revenue a year, I will gladly pay a one off $2 Mill fine, change my wording slightly e.g. stick the word "may" in it somewhere and continue trading as normal.

        • by BenVis ( 795521 ) on Wednesday January 06, 2016 @10:30AM (#51248055)
          from TFA:

          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.

          To me that suggests that, 24 Mil in revenue in 2012 notwithstanding, $2 million is already enough to ruin the company.

          • That is a bit confusing really,

            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. The order requires the company to notify subscribers who signed up for an auto-renewal plan between January 1, 2009 and December 31, 2014 about the FTC action and to provide a means to cancel their subscription.

            So what? They shut down after paying only 2 Mil of 50 mil, how much did the directors/owners get in fees/dividends before shut they down. Why would they need to notify subscribers if they are shutting down anyway? What it suggest is they have taken most of the money out of the company already, and using a limited liability company to reduce their bill from 50 million to 2. And may continue to trade under a different holding company.

  • by Anonymous Coward

    Unlike most IQ tests I ever took, the tests on Lumosity actually correlated pretty well with my own experience of where I do well and where I don't do well. For example, games which require switching tasks rapidly is not something I can do. The games which required that did expose it. I got very high scores on numerical skills and much lower ones on vocabulary ones. This all may seem very general, but when I played their games, I did find that they targeted very specific cognitive functions. The questi

    • Unlike most IQ tests I ever took, the tests on Lumosity actually correlated pretty well with my own experience of where I do well and where I don't do well. For example, games which require switching tasks rapidly is not something I can do. The games which required that did expose it. I got very high scores on numerical skills and much lower ones on vocabulary ones. This all may seem very general, but when I played their games, I did find that they targeted very specific cognitive functions. The question is whether playing the games can improve those functions or is it only testing them. They claimed they improved them. And, I guess, they can't back that up. But the tests were more accurate than anything else I've seen anywhere (and I have looked).

      The more IQ tests you do, the better you get at them and the higher your IQ score becomes.

      Why are there so many people who think they have 150+ IQs? Because if you troll around the internet doing IQ tests for long enough, eventually you'll find one that you get a 150+ score on, even without the tests being rigged in some way.

  • Bullshit ... (Score:3, Interesting)

    by gstoddart ( 321705 ) on Tuesday January 05, 2016 @08:51PM (#51245041) Homepage

    The $2 million settlement will be used to compensate Lumosity consumers who were misled by false advertising

    Name me one fucking instance where the settlement went to the consumers who were misled. This will go the lawyers, and you'll get mailed a fucking coupon for $5 off your next goddamned month of Lumosity.

    These settlements are complete horseshit, and don't act as a deterrent. Compensate consumers my ass.

    And, yes, I'm intentionally swearing for effect, because claiming this will compensate consumers if a completely fucking lie.

    You want to compensate people and act as a deterrent? Let them line up and take a swipe at the CEO. THAT might stop this kind of behavior. This $2 million settlement? That won't do a damned thing.

  • The company will also be required to provide an easy way to cancel... lifetime memberships for $299.95.

    Why would anyone cancel a lifetime membership in this, or anything for that matter?
    If they have perpetual access with no further obligation it would be stupid to cancel it (unless they think cancelling is some kind of moral stand).

    • by mysidia ( 191772 )

      Why would anyone cancel a lifetime membership in this, or anything for that matter?

      You decided it was worthless, so you want your $299.95 back... suppose you are 25 years old, and you bought a lifetime membership with an expectency of living 75 more years, so you purchased approximately 900 months of service, and you want to cancel after 24 months.... That should get you a refund of $291

      • Why would anyone cancel a lifetime membership in this, or anything for that matter?

        You decided it was worthless, so you want your $299.95 back... suppose you are 25 years old, and you bought a lifetime membership with an expectency of living 75 more years, so you purchased approximately 900 months of service, and you want to cancel after 24 months.... That should get you a refund of $291

        I suppose you think that if you died tomorrow your heirs would get a refund of the balance too?

        Unless they worded their T&C really stupidly, I doubt you've got a chance.

  • PT Barnum said it best....
  • I heard that Oil of Oley was sued. I think that they reworded their commercials to say that "it makes skin look younger" from the old claims that it "actually reverses effects of aging". Mostly, I think that the company reduced the number of explicit TV ad and rely on "word of mouth" and leave the blame with the cosmetics salesperson to take any hits.
    Still, fraud by my definition, but less fraudulent. Olive Oil is just as "effective at reducing lines and wrinkles" but costs a lot less.
    • There is also an infomercial done by Jayne Seymore for some product that is supposed to eliminate "crepey skin". Lots of testimonials and silly pseudo-scientific gibberish. It's oil for crissakes. I wash my hands a lot, so they tend to get dry and "crepey" A little glycerin and rosewater followed by a little olive oil, and they are as soft and smooth as can be.

      Buying both wouldn't make the down payment on a half ounce of Jayne's stuff.

  • The science behind Lumosity's claims looks positive so far. Did the FTC provide any counter examples or studies showing that certain types of Lumosity games are not significantly effective? It seems to me that the government would have a vested interested in improving the intelligence of its population. http://www.scientificamerican.... [scientificamerican.com]

Unix: Some say the learning curve is steep, but you only have to climb it once. -- Karl Lehenbauer

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