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Cerebral, the embattled digital mental health company, is reportedly being investigated by the U.S. Federal Trade Commission for potentially deceptive cancellation practices.
A Cerebral spokesperson declined to specifically comment on whether it was being investigated. However, the spokesperson said the company was fully cooperating with the FTC.
The Wall Street Journal reported on June 14 that the FTC sent a letter to Cerebral requesting information on whether the company has continued to charge patients even after they’ve attempted to cancel their subscription. According to the report, the FTC has asked Cerebral to preserve relevant documents.
The FTC not have a comment on the reported investigation.
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An investigation would represent the second federal agency that has looked into Cerebral in the past two months. The company received a grand jury subpoena from the U.S. Attorney’s Office for the Eastern District of New York on May 4 to investigate “possible violations of the Controlled Substances Act” related to how its prescribed medication for ADHD.
In mid-May, Cerebral’s previous CEO Kyle Robertson was forced out and replaced by Dr. David Mou, who previously served as the company’s president and chief medical officer. Robertson’s departure came after mounting criticism of the startup’s prescribing practices, including three lawsuits by former employees and the investigation from the U.S. Attorney’s Office..
CVS Health, Walmart and TruePill have stopped filling prescriptions from the company, while health insurer Aetna has stopped covering its services. In response, the company has announced it will no longer prescribe certain controlled substances to treat ADHD.
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Amid these challenges, Cerebral said it was restructuring its operations and eliminating a number of positions by July 1, although it did not specify how many employees would be laid off. According to an internal memo obtained by Digital Health Business & Technology, the affected areas will include support and operations teams within the company’s San Francisco headquarters. The company has 2,500 employees.
In December 2021, Cerebral received a $300 million funding round and has a valuation of nearly $5 billion.
This story first appeared in Digital Health Business & Technology.
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