NeuroMetrix settles $4m false advertising case with FTC

March 4, 2020 By Nancy Crotti Leave a Comment

NeuroMetrix Quell 2.0 AI artificial intelligence pain relief

NeuroMetrix’s Quell 2.0 [Image courtesy of NeuroMetrix]

Pain-treating TENS device company NeuroMetrix (NSDQ:NURO) has agreed to pay at least $4 million to settle a false advertising case brought by the Federal Trade Commission FTC.

The commission said today that the Woburn, Mass.-based company also agreed to stop making deceptive claims that its Quell device treats pain throughout the body when placed below the knee and is clinically proven and cleared by the FDA to do so.

The order settling the FTC’s allegations bars the marketers of Quell from making such pain-relief claims unless they are true, not misleading, and supported by competent and reliable scientific evidence; prohibits misrepresentations about clinical proof or the scope of FDA clearance for any device; and requires them to pay redress.

“With the opioid crisis, consumers are searching for drug-free pain relief,” said Daniel Kaufman, deputy director of the Bureau of Consumer Protection, in a news release . “Devices claiming pain relief without scientific support harm consumers and undermine the market for non-drug products. The FTC will act on empty promises of pain relief.”

NeuroMetrix has been marketing the device since 2015 and last year turned to artificial intelligence to better tailor Quell treatments. In December, CEO Shai Gozani cut his annual salary to $1 from a previous $422,200 — accepting a stock option to purchase 100,000 shares instead. The 2020 executive compensation package, approved Dec. 29 by the company board’s compensation committee, also cuts salaries in return for stock options for other company leaders.

The defendants marketed Quell nationwide, touting the device as “clinically proven” and “FDA cleared” for widespread chronic pain relief. The FTC alleged that the defendants lack scientific evidence to support widespread chronic pain relief claims, and their claims about clinical proof and the scope of FDA clearance are false.

Today’s settlement requires the defendants to pay the $4 million to the FTC within 30 days and to turn over up to an additional $4.5 million in future foreign licensing payments. The commission vote approving the complaint and proposed consent order was 5-0, with commissioner Christine S. Wilson issuing a statement concurring in part and dissenting in part. The complaint and proposed order were filed in the U.S. District Court for the District of Massachusetts.

NeuroMetrix executives could not be reached for comment. Shares of NURO closed up 4.46% at $2.34 today.

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