FTC Orders Cerebral to Pay $5 Million in Refunds After Subscription Scandal

FTC Orders Cerebral to Pay $5 Million in Refunds After Subscription Scandal.

The Federal Trade Commission (FTC) has ordered Cerebral, Inc. to issue more than $5 million in refunds to former customers, following a sweeping investigation into the mental health startup’s business practices.

The agency accused the telehealth provider of misleading users about how to cancel subscriptions and of mishandling sensitive personal health data by sharing it with third parties without proper consent.

As part of the settlement, over 40,000 consumers will receive compensation.

These refunds are designated for individuals who tried to cancel their subscriptions on or before May 2022 but continued to be billed, some for extended periods after their initial cancellation requests.

A Pattern of Deception

Launched with the promise of making mental health treatment more accessible, Cerebral marketed itself as a flexible, cancel-anytime service. But behind the scenes, regulators say, the company created unnecessary hurdles to cancellation, requiring users to navigate a time-consuming, often confusing process to end their memberships.

“Consumers deserve clear, honest information when they sign up for a subscription, especially when their personal health is involved,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.

“Cerebral didn’t just make it hard to cancel, they charged people after they tried to leave, and they mishandled sensitive health data along the way.”

Sharing Data Without Consent

The FTC’s findings go beyond billing issues. Investigators say Cerebral also failed to protect user privacy by disclosing personal health information to third parties, including marketing and analytics firms, without proper consent.

This data reportedly included details about users’ mental health conditions, prescriptions, and therapy sessions.

Such actions, regulators argue, not only violated consumer trust but also ran afoul of federal privacy laws, including the Restore Online Shoppers’ Confidence Act (ROSCA).

What Consumers Need to Know

Eligible customers will receive payments either by mail or through PayPal. Paper checks must be deposited within 90 days, while PayPal users are encouraged to redeem their payments within 30 days.

The refund process is being managed by Epiq Systems, an independent administrator hired by the FTC.

Consumers with questions about their refunds can call 1-888-884-6036 or email info@CerebralRefund.com. Importantly, the FTC reminds recipients that it never asks for payment or personal banking information to issue a refund.

Cerebral’s Ongoing Legal and Ethical Challenges

1. DOJ Settlement Over Controlled Substances

In late 2024, Cerebral agreed to pay $3.65 million to settle allegations brought by the U.S. Department of Justice (DOJ) involving its prescription practices. Regulators found that the company failed to prevent the unauthorized distribution of controlled substances, including stimulants like Adderall.

From 2019 to 2022, Cerebral allegedly created incentives for high prescription volumes and allowed patients to obtain duplicate prescriptions by creating multiple accounts.

2. FTC Action on Data Privacy Violations

Earlier in April 2024, the Federal Trade Commission proposed an enforcement order against Cerebral for disclosing users’ sensitive health information, such as diagnoses and treatments to third parties for advertising purposes.

The order, still pending court approval, included a $7 million penalty and would ban the company from using such data for marketing.

3. Major Data Breach Affects Millions

In 2023, Cerebral disclosed a massive data breach involving more than 3.1 million individuals. The incident stemmed from the company’s use of tracking pixels, which unintentionally leaked personal health information to tech platforms.

The breach drew scrutiny from the Department of Health and Human Services (HHS), further damaging the company’s public image.

4. FTC Refund Order in 2025

Most recently, in May 2025, the FTC ordered Cerebral to distribute more than $5 million in refunds to over 40,000 users after finding the company used deceptive practices to trap customers in recurring subscriptions. The agency also cited improper data handling as part of the violation.

5. Leadership Turnover Amid Crisis

The company’s internal upheaval has mirrored its external challenges. Co-founder and CEO Kyle Robertson stepped down in 2022. His successor, Dr. David Mou, exited in December 2024. As of early 2025, Cerebral is being led by interim CEO Brian Reinken, marking the third leadership change in as many years.