Digital mental health company Cerebral is under investigation by the Federal Trade Commission, according to a letter sent by the agency and reviewed by the Wall Street Journal.
According to WSJ, the FTC is investigating whether Cerebral was involved in deceptive or unfair marketing or advertising practices, including raising questions about programs where the virtual mental health company continues to bill patients for subscriptions until they cancel.
Patients told the WSJ they had trouble canceling their accounts or receiving refunds when they didn’t use services.
In a statement to MobiHealthNews, Cerebral said it is cooperating with the FTC.
WHY IT MATTERS
It’s also facing another investigation for possible violations of the Controlled Substances Act. Cerebral confirmed it had received a grand jury subpoena from the U.S. Attorney’s Office for the Eastern District of New York in early May.
“To be clear, at this time, no regulatory or law enforcement authority has accused Cerebral of violating any law,” the company wrote in a statement at the time.
Cerebral has since begun halting most prescriptions of controlled substances and replaced its former CEO and cofounder Kyle Robertson. The company also recently announced a transformation plan that includes reviewing its clinical and marketing practices.
But the digital mental health company, which raised $300 million in funding late last year, is starting to face blowback from payers. Forbes reported last week Aetna is canceling its contract with Cerebral in August. Optum said it will also remove Cerebral from its behavioral health network by the end of the summer.
At the American Telemedicine Association Association’s Annual Conference & Expo in early May, Dr. David Mou, now Cerebral’s CEO, stood by their quality, but acknowledged they had made some mistakes in marketing.