How did the Lumosity settlement structure consumer refunds and corporate conduct requirements?
Executive summary
The Lumosity settlement required Lumos Labs to pay $2 million into a redress fund for consumers and to notify and enable affected subscribers to cancel auto-renewals, while also imposing injunctive limits on future marketing and endorsement practices including requirements for scientific support for broad cognition claims and disclosure of material connections for testimonials [1] [2] [3]. The order included a suspended larger judgment and specific conduct obligations aimed at preventing recurrence of the deceptive advertising alleged by the FTC [2] [1].
1. The money: a $2 million redress fund and who could claim it
The monetary component of the settlement was a $2 million payment earmarked for consumer redress, rather than the originally asserted $50 million judgment, which the FTC’s order stated would be suspended after Lumos Labs paid the $2 million [1] [2] [4]. The FTC and subsequent settlement notices made clear that the $2 million was intended to compensate subscribers who were allegedly misled by advertising about the games’ real-world cognitive and health benefits [1] [5] [6]. Some consumer-facing summaries and claims-administration pages identified eligible subscribers by subscription period and spending thresholds—examples in coverage noted subscriptions from Jan. 1, 2009 through Dec. 31, 2014 and minimum spend criteria for refunds in certain notices [3] [7].
2. How refunds were delivered and subscription relief worked
As part of implementing the redress, Lumos Labs was ordered to notify online subscribers of the FTC action and to provide an easy, conspicuous way for customers to cancel auto-renewal billing so they would not be charged in the future without affirmative consent [1] [7]. Reporting from multiple outlets described pop-up or notice mechanisms before users accessed the games and other communications to give customers the chance to opt out of auto-renewing plans [6] [8]. The settlement therefore combined one-time monetary redress with operational changes intended to prevent ongoing billing that could perpetuate consumer injury [1] [7].
3. Corporate conduct requirements and injunctive relief
Beyond refunds, the settlement imposed injunctive terms restricting Lumosity’s future marketing: the company must have competent and reliable scientific evidence—often interpreted as human clinical testing—before making broad claims that its training improves real-world cognitive performance or prevents or delays cognitive decline and disease [2] [9]. The order also limited the company’s ability to present testimonials without disclosing material connections; the FTC specifically cited the practice of soliciting endorsements via prize contests without clear disclosure [1] [10]. Those provisions applied not only to the company but to named corporate officers named in the complaint, constraining future leadership behavior under the order [2].
4. The suspended judgment and legal framing of the settlement
The FTC complaint originally sought a much larger monetary judgment—reported in the agency’s materials as $50 million—but the settlement framed the $50 million as a suspended judgment that would be lifted if Lumos Labs failed to obey the order, with the immediate remedy set at $2 million in payments and the injunctive restraints [2] [4]. Legal commentary and firm notices framed the settlement as both corrective for past advertising and preventative through compliance obligations that require substantiation for health- and cognition-related claims before they are published [9] [11].
5. Competing narratives and what the settlement does not resolve
Lumosity defended its work as contributing to research and framed the settlement as a response to marketing language rather than product quality or the rigor of its science, an argument the company made in statements to media [8] [7]. The FTC and legal analysts, however, stressed that the order was designed to stop unsubstantiated claims and undisclosed endorsements, leaving open the broader scientific debate over training transfer and long-term cognitive benefits—matters not resolved by this consumer-protection settlement [2] [6]. Reporting and settlement notices document the specific remedies and restraints but do not settle every scientific or commercial dispute about the platform’s underlying research beyond requiring adequate evidence for future claims [9] [8].