The FTC has recovered over $5 million from mental health service Cerebral after the company trapped customers in subscriptions they couldn’t cancel, leaving over 40,000 consumers eligible for refunds.
At a Glance
- The FTC is distributing over $5 million in refunds to 40,249 Cerebral customers who were charged after requesting cancellation
- Cerebral violated the Restore Online Shoppers’ Confidence Act by making cancellation difficult despite advertising “cancel anytime” policies
- Refunds target consumers who requested cancellation before May 2022 but continued to be charged
- Cerebral also allegedly shared sensitive health information with third parties for advertising purposes
- The case highlights the FTC’s enforcement priorities under the new Click-to-Cancel Rule effective May 2025
Mental Health Service Provider Penalized for Deceptive Practices
The Federal Trade Commission has secured more than $5 million in refunds for consumers trapped in unwanted subscriptions by online mental health provider Cerebral. The company, which offered telehealth mental health services through subscription plans, allegedly made it nearly impossible for customers to cancel their recurring payments despite promising they could “cancel anytime.”
According to FTC documents, Cerebral’s violations weren’t limited to difficult cancellation processes. The company also allegedly disclosed sensitive personal health information to third-party advertisers without proper consent, compounding privacy concerns with their deceptive billing practices.
Refund Distribution Underway
The FTC has appointed Epiq Systems, an independent refund administrator, to distribute the recovered funds to affected consumers. More than 40,000 people are eligible for refunds, with payments being sent via check or PayPal depending on the information available. Eligible recipients include consumers who requested cancellation on or before May 2022 but were still charged for services.
The Commission has emphasized that legitimate refund notices will never require payment or personal financial information. This warning comes as scammers often attempt to exploit news of refund programs to collect personal data from unsuspecting consumers.
Part of Broader FTC Enforcement Push
The action against Cerebral comes as the FTC implements its new Click-to-Cancel Rule, which takes effect May 14, 2025. The rule requires businesses to make subscription cancellations as easy as signing up. While the Cerebral case predates this rule, it demonstrates the Commission’s commitment to enforcing transparent cancellation policies under existing authorities like the Restore Online Shoppers’ Confidence Act (ROSCA).
The new rule is facing legal challenges in the Fifth Circuit Court of Appeals, but the FTC maintains it will continue enforcement actions against deceptive cancellation practices regardless of the outcome. Companies violating these standards face potential penalties of up to $53,088 per violation.
In another notable case, the FTC has filed complaints against Uber for similar cancellation practices and unauthorized charges. This enforcement action is one of the first under the new Trump-Vance FTC leadership, with Chair Andrew Ferguson signaling continued attention to consumer protection issues.
Consumer Protection in Subscription Services
The FTC’s actions reflect growing concern about subscription-based business models that make cancellation deliberately complicated. Under current and forthcoming rules, businesses must provide clear disclosure of terms before enrollment, obtain explicit consent before charging consumers, and maintain simple cancellation mechanisms for all subscription services across all sales channels.
The Cerebral settlement represents part of a larger consumer protection effort by the FTC, which recovered over $339 million for consumers nationwide in 2024. Consumers with questions about the Cerebral refund process can contact the administrator at 1-888-884-6036 or [email protected].
For businesses operating subscription services, these enforcement actions serve as a reminder to review cancellation policies and ensure compliance with both ROSCA and the upcoming Click-to-Cancel Rule to avoid costly penalties and reputational damage.
