Tripp's Blog

When does mobile marketing go too far? What can we learn about ethical digital marketing practices from the Cerebral case?
Mobile marketing provides Companies an opportunity to build personalized, convenient brand interactions for customers. Brands are able to reach customers from virtually anywhere via mobile applications, mobile web sites, email, SMS/text messages, and subscription-based digital content. At the same time, the vast amounts of data collected by Companies through these channels creates a considerable level of ethics and regulatory obligations for Marketers. A recent federal trade commission (FTC) case involving the online mental health company Cerebral shows the potential risks associated with failing to meet those obligations.

What Laws were broken by Cerebral?

There were two main federal statutes broken by Cerebral in this case. One was the restore online shoppers’ confidence act (ROSCA), which requires a clear disclosure of all of the material terms and conditions of a product or service before a consumer is charged for it. Specifically, the FTC claimed that Cerebral did not adequately inform customers regarding the cancellation policy of the monthly membership program prior to collecting payment from customers. While customers were informed that they could “cancel at any time”, the FTC said that customers would have to follow a very complex, multiple-step procedure to cancel their memberships. Furthermore, according to the FTC, many Consumers continued to receive charges for months after they requested cancellations (federal trade commission [FTC], 2025).

Additionally, there were significant privacy issues with regards to how Cerebral used Consumers’ personal and health related information. The FTC stated that Cerebral disclosed highly sensitive health-related information to third-party advertisers. Since many individuals seeking mental health services may believe that such sensitive information will be treated confidentially, this behavior is particularly egregious. Ultimately, as part of the enforcement action brought by the FTC, Cerebral was prohibited from disclosing or using Consumers’ health information for advertising purposes (FTC, 2024).

Harm to Consumers

Poorly run and/or un-ethical mobile/digital marketing practices can cause great harm to Consumers financially and personally. In addition to charging customers after they requested cancellation of their Cerebral memberships, thousands of Consumers received over $5 million in refunds (FTC, 2025).

Privacy breaches can lead to additional types of harm. Many times, Consumers provide app developers/online service providers with large amounts of personal data without knowing how that data will be used for marketing. When private data is provided without the knowledge/approval of Consumers, Consumers lose faith in both the specific company and digital marketing generally.

Another example of how poorly managed digital marketing can impact Consumers can be found in the FTC’s complaint against Adobe. The FTC alleged that Adobe made it difficult for certain subscribers to terminate their contracts through obscure cancellation procedures, and made it hard for others to find early termination fees. In some instances, Consumers experienced repeated attempts by customer service representatives to prevent them from cancelling; and in several cases, despite their requests for cancellation, Consumers were still charged (FTC, 2024). Taken together, the Cerebral and Adobe complaints illustrate why transparency must continue throughout the entire length of the consumer relationship (i.e., not just until a consumer makes a purchase).

Penalties for Companies

Marketers that violate consumer protection guidelines can suffer serious financial and operating penalties. As part of Cerebral’s settlement with the FTC, Cerebral agreed to pay approximately $5.1 million in refund money to Consumers. Additionally, Cerebral paid a $10 million civil penalty but due to the fact that the company cannot afford to pay that amount, much of that penalty was suspended. The settlement also mandated that Cerebral significantly alter its privacy/security/cancellation practices (FTC, 2024).

As these outcomes show, poorly run marketing can lead to costs much greater than simply paying a fine. Fines can include monetary refunds, attorney’s fees, limited future opportunities to engage in marketing activities, loss of reputation, etc. Loss of consumer confidence/trust can be devastating since Consumers often can go directly to competitors if they feel they are no longer confident in a particular business or service.

How Marketers can conduct themselves ethically

Ethical marketing begins with treating consumer permission, transparency, and control as essential components of each mobile marketing effort. Marketers must tell Consumers exactly what personal data is being collected, why that data is being collected, and whether that data will be sold/shared with third-party organizations. Prior to making purchases, businesses selling recurring subscription-based products/services must explicitly detail pricing/terms/renewal terms/cancellation requirements. Canceling should be simple and should not involve artificial barriers put into place by Marketers to discourage customers from terminating their contracts/subscriptions.

Marketers must also avoid engaging in spamming/marketing to unsubscribed/withdrawn Consumers. Once Consumers opt-out/unsubscribe from receiving marketing materials/communications from a business; the business must respect that request immediately. Marketing professionals must routinely review all marketing efforts for compliance with relevant consumer protection and privacy regulations, rather than assuming that ensuring compliance is someone else’s responsibility within the organization.

In conclusion, ethical mobile marketing is about respecting the consumer. The Cerebral case illustrates that short-term approaches designed to maintain subscriptions/advertising data can generate significant negative long-term implications for businesses. Using transparent language; obtaining meaningful consumer consent; responsibly using/Consumers’ personal data; and providing easy cancellation options are more effective than minimizing liability—these practices enable businesses to establish long-lasting customer relationships and earn trust.

Federal Trade Commission. (2024, April 15). Proposed FTC order will prohibit telehealth firm Cerebral from using or disclosing sensitive data for advertising purposes, and require it to pay $7 million.

Federal Trade Commission. (2024, June 17). FTC takes action against Adobe and executives for hiding fees, preventing consumers from easily cancelling software subscriptions.

Federal Trade Commission. (2025, May 8). More than $5 million in refunds sent to consumers as a result of the FTC’s action against Cerebral over deceptive cancellation practices.

States News Service. (2025, May 8). More than $5 million in refunds sent to consumers as a result of the FTC’s action against Cerebral over deceptive cancellation practices. States News Service.