Recently, the Federal Trade Commission levied a significant penalty on the virtual mental health startup, Cerebral. $7 million in fines were imposed, accusing the company of mishandling its users’ crucial health data while also being misleading on its cancellation policies.
Conceding to the obligation, Cerebral agreed to the payment and, additionally, consented to a unique prohibition preventing the startup from utilizing collected health data for most advertising purposes.
Cerebral specializes in the virtual treatment of mental health conditions, predominantly ADHD, anxiety and depression. The startup, having faced years of criticism for its data privacy practices, has also been embroiled in recent legal complications.
In addition to the FTC’s stipulations, Cerebral must also compensate nearly $5.1 million as partial refunds for consumers negatively affected by its cancellation policies. The company is also obligated to pay a $10 million civil penalty with $2 million to be paid up front.
With this news circulating in the industry, it’s pertinent to ask – what does this signify for the industry at large?
Ray Mina, Vice President of Marketing at Freshpaint, opined on the FTC’s order. He mentioned that the inclusion of a permanent ban on using consumer data for most marketing efforts was the part that surprised him the most.
Looking at this development from a wider lens, the healthcare industry is forced to reevaluate and revise its data privacy and compliance strategies to avoid the same fate as Cerebral.
As recent bulletins on the use of online tracking by healthcare entities have demonstrated, the Office for Civil Rights has been intensifying its scrutiny, taking serious cognizance of any violation of privacy norms within the healthcare industry.
Ultimately, the developments surrounding Cerebral’s legal setback send a clear message to all entities dealing with private health information – compliance to laid down privacy regulations is indispensable and non-negotiable.