Cerebral Inc. to Pay $7M for Data Exposure, Non-Cancels on Counseling Subscriptions

Cerebral Inc., a major U.S. provider of telemedicine mental health services, will likely have to pay $7 million in penalties and refunds to clients as part of a settlement with the Federal Trade Commission.

The firm exposed the personal information of thousands of patients, shared data with third parties and made it unusually difficult for clients to cancel recurring charges, according to federal court documents in Florida and a news release from the FTC.

The complaint alleges “that the company continued to charge consumers while it slow-walked consumers’ cancellation requests, which cost consumers millions in additional charges,” the commission said.

Cerebral officials declined to comment Tuesday and it was unclear if the company’s liability insurers would be asked to cover the payments. In a statement posted on its website, the firm said it “has been transparent and fully cooperative throughout the investigation and remains committed to providing excellent care for our valued patients while upholding the highest standards of customer service, data protection, and client privacy.”

If the settlement is approved by the U.S. District Court for Southern Florida, the firm will have to pay $5.1 million in partial refunds to clients, plus a $2 million penalty. A $10 million penalty was suspended due to Cerebral’s inability to pay the full amount, the FTC explained.

Cerebral, which has offices in Delaware and California, has faced other lawsuits and has struggled financially in recent months, according to news reports. In January, the New York Attorney General’s Office announced that Cerebral must pay $740,000 in penalties and restitution for continuing to charge clients after subscriptions were canceled.

Cerebral’s founder and chief executive officer Kyle Robertson was forced out in 2022 over questions about prescribing practices reportedly tied to attention-deficit drugs, according to a complaint in Delaware Chancery Court and Bloomberg News.

The FTC complaint alleged that Robertson was behind some of the problems consumers ran into in 2021. “When it first implemented an easier cancellation button in April 2020, the company removed it after only two weeks at Robertson’s direction after seeing cancellations rise, according to the complaint, the FTC said.

As part of the FTC settlement, the online counseling service has agreed to: provide enhanced consumer protection; refrain from disclosing client data to third parties for marketing purposes; develop a comprehensive privacy and data security program; delete consumer data not used in treatment; post a notice on its website about the issues; and to avoid misrepresenting cancellation policies.

The joint stipulation agreement can be seen here.