
An agreement has been reached between the government and Cerebral to settle a case with multiple charges including misleading cancellation practices and mismanagement of consumer information. The FTC (Federal Trade Commission) said that according to the settlement, Cerebral will be going ahead with certain restrictions on the handling of data and revisiting the procedures of service cancellation as well as paying $7M.
The resolution, which was by FTC, also includes concerns related to the involvement of Kyle Robertson, the former CEO, because the agreement does not apply to him and only applies to the company.
A substantial part of the money, more than $5M, will be used for partial refunds to be made to the consumers who were affected by deceptive cancellation practices. In addition, a $10M civil penalty will be replaced by a $2M payment as the FTC will suspend the penalty on account of the company’s financial limitations.
The complaint made by FTC accentuates how the company gave assurances of safe mental health services to attract consumers but could not disclose its data-sharing procedures sufficiently. According to reports, the company shared 3.2M individuals’ sensitive information, without consent, with third parties including (but not limited to) TikTok and LinkedIn. FTC also noticed multiple shortfalls in security procedures, one of which was easy user data access to former employees, including patient names, diagnoses and other promotional material.
Lina Khan, FTC Chair, condemned the company’s actions, highlighting consumer privacy breach and also declared a ban on Cerebral’s use of health data for the purpose of advertising. The suggested order mandates the company to permanently avoid sharing consumer data with third parties for marketing purposes, and also to update its processes regarding cancellation of services.
The agreement also requires Cerebral to launch a thorough data security and privacy program, make the cancellation process easier, delete most of the customer data that is non-essential for care, and notify the users about the complaint’s claims and the requirements of the proposed order on the website.
Founded in January of 2020, Cerebral delivers mental health services for numerous conditions online. The company experienced swift progress which may also be due to rising demand on account of the pandemic. On the other hand, the company faced regulatory issues since 2022, which resulted in the resignation of Kyle Robertson, CEO. The criticism for mismanagement of customer data continued even after the changes made in the leadership.
Cerebral recognized the settlement and affirmed its dedication to work together with the government’s investigation, all the while prioritizing the improvement of its platform’s security.
The company had come under scrutiny for its virtual prescribing methods, especially concerning drugs such as Adderall and Ritalin. However, Cerebral stopped issuing new prescriptions for these medications in 2022 in response to media coverage and the beginning of federal inquiries.