Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: ‘Brain training’ program developers/marketers settle FTC charges regarding deceptive claims, (May 19, 2016)
Organizations Mentioned:Federal Trade Commission
By Michael Menzhuber, J.D., LL.M.
Under a settlement with the Federal Trade Commission, the developers and marketers of LearningRx "brain training" programs have agreed to pay $200,000 and to stop making false and unsubstantiated claims, the agency announced today (FTC v. LearningRx Franchise Corp., Civil Action No. 1:16-cv-1159).
The FTC’s complaint charged that LearningRx Franchise Corp. and its CEO, Dr. Ken Gibson, deceptively claimed that their programs were clinically proven to permanently improve serious health conditions such as ADHD, autism, dementia, Alzheimer’s disease, strokes, and concussions. They also claimed that LearningRx brain training: (1) substantially improved school grades, college admission test scores, career earnings, and job and athletic performance; and (2) was ten times more cost-effective than tutoring.
According to the FTC, LearningRx was promoted through LearningRx.com and affiliated websites, as well AS through a blog, Facebook and Twitter posts, print and radio ads, and direct mail. The defendants also allegedly used Google search ads to target consumers searching for terms such as "cure for ADD," "autism cure," "Asperger cure," and "severe traumatic brain injury cure."
The defendants, based in Colorado Springs, Colorado, offered LearningRx training through more than 80 LearningRx centers that it franchised in 25 states.
The proposed stipulated final order prohibits the defendants from:
claiming that their programs improve performance at work or in athletics;
claiming that their programs improve the cognitive function of individuals with age-related or other health conditions, unless the claims are not misleading and substantiated by human clinical testing;
making unsubstantiated claims about the performance, benefits, or efficacy of their programs;
misrepresenting the existence or results of any tests or studies; and
providing others with the means to make the prohibited claims.
The order imposes a $4 million judgment against the company, which will be suspended upon the payment of $200,000 as disgorgement of ill-gotten gains.
News: ConsumerProtection FranchisingDistribution FederalTradeCommissionNews