In a landmark decision, over 16,000 New Yorkers are set to receive payouts after the mental health company, Cerebral, reached a settlement with the New York Attorney General, Letitia James. The settlement, which amounts to a total of $740,000, includes $200,000 in penalties and $540,162 in restitution for patients who were affected by the company’s deceptive and burdensome cancellation policies. The New York Attorney General investigation revealed that Cerebral had been misleading patients by making it excessively difficult to cancel subscriptions and by engaging in practices that harmed consumers seeking mental health services.
The Heart of the New York Attorney General Investigation: Deceptive Cancellation Tactics
At the center of the New York Attorney General investigation was Cerebral’s subscription model and its frustrating cancellation process. The company, which offers virtual therapy and psychiatry services, advertised a streamlined, easy-to-use cancellation option. However, it became clear that the reality was far from what was promised. The process was described as “long and burdensome,” and patients seeking to cancel their services often found themselves trapped in an endless cycle of delays and unnecessary obstacles.
The company’s cancellation system featured a click-to-cancel button, but Cerebral allowed itself a full 72 hours to finalize any cancellation. In some cases, this process took up to a week or longer. During this extended delay, patients would continue to receive repeated communications from the company, trying to convince them not to cancel their services. In many instances, if the patient’s billing cycle fell within the delay period, Cerebral would charge for another month of services—often for services that the patient no longer needed or wanted.
The New York Attorney General investigation also uncovered that the company would sometimes bill patients even when there were no clinicians available to provide services. This practice left many individuals paying for appointments they never had, further exacerbating the financial burden on consumers who were already dealing with mental health challenges.
Manipulating Online Reviews: An Unethical Attempt to Control Perception
In addition to its deceptive billing and cancellation practices, the New York Attorney General investigation found that Cerebral was manipulating online reviews in a manner that violated consumer rights. The investigation revealed that the company instructed employees to suppress negative feedback from patients by asking them to remove or edit their reviews. The company allegedly made these requests under the guise of helping potential patients find trustworthy care, with employees telling patients, “We wouldn’t want anything online to deter someone from seeking mental health care, and that’s really why we ask people if they are willing to [edit their review].”
Cerebral didn’t stop at asking patients to edit or remove critical reviews—it also directed its employees to actively post fake positive reviews, upvote favorable comments, and downvote negative ones. These actions were designed to create a skewed and misleading online presence, one that misrepresented the company’s services and falsely bolstered its reputation. The company effectively engaged in a campaign to hide the truth and prevent potential patients from making fully informed decisions about their care.
Cerebral’s Financial Downfall and Reputation Damage
Cerebral, once valued at a staggering $4.8 billion, has seen a significant decline in its reputation in recent years. The company’s meteoric rise was fueled by its promise to make mental health care more accessible through virtual services, offering convenient, subscription-based therapy and medication management. The company also attracted over $460 million in investments, solidifying its place as one of the most prominent mental health startups in the industry.
However, in 2022, the company found itself embroiled in controversy after the Department of Justice launched an investigation into its prescribing practices. The investigation focused on allegations that Cerebral had been overprescribing ADHD medications, including controlled substances, a practice that led the company to eventually shut down its controlled substance prescription program later that year.
The fallout from the investigation was swift. In response to growing concerns about its practices, Cerebral laid off more than 1,000 employees—representing 20% of its workforce—in a move that reflected the financial and reputational damage the company was facing.
Despite these challenges, Cerebral continues to operate, offering virtual therapy and psychiatry services for various mental health conditions, including depression, anxiety, ADHD, PTSD, and bipolar disorder. The company also states that it may offer controlled substances in the future, though it no longer does so currently.
The Impact on Consumers and the Mental Health Industry
The settlement with the New York Attorney General is a significant development in the ongoing saga of Cerebral’s troubled business practices. While the $740,000 payout will help compensate those who were misled by the company’s deceptive tactics, the broader implications of this case go far beyond just one company. It raises important questions about the ethics of virtual mental health care and how companies in this space are held accountable for their actions.
For the 16,000 affected patients in New York, this settlement provides some form of restitution, though it’s unlikely to undo the harm caused by Cerebral’s business practices. Many of these patients were billed for services they didn’t receive or had difficulty navigating an unjust cancellation process. Additionally, those who were misled by the company’s manipulated online reviews may feel betrayed by the company’s attempt to deceive them into believing that their services were better than they actually were.
This case also highlights the vulnerabilities of consumers in the rapidly growing telehealth and virtual care space. While online mental health services offer a much-needed resource for many individuals, particularly those in underserved areas, the industry remains largely unregulated, leaving patients open to exploitation by unethical companies. As telehealth becomes an increasingly popular option for mental health care, it’s essential that companies operating in this space prioritize transparency, patient rights, and ethical business practices.
A Warning to Other Providers and Future Reforms
The New York Attorney General investigation and the subsequent settlement are a reminder that deceptive business practices will not go unnoticed. The New York Attorney General’s office has made it clear that consumer protection laws must be upheld, especially when it comes to critical services like mental health care. Attorney General Letitia James emphasized that “Making New Yorkers withstand stressful and extended delays to cancel a subscription for mental health care coverage is unacceptable.” She added that the tactics used by Cerebral were not only unfair but also illegal.
Cerebral has since claimed that it has implemented the necessary changes to improve its business practices and restore trust with its patients. The company expressed its commitment to remaining a “trusted mental health partner to all who need care,” and it seems to be taking steps toward reform.
However, this case underscores the need for more comprehensive regulation in the virtual health care industry, particularly in the mental health sector. As more people seek online services for mental health, the industry must be held to higher standards, ensuring that patients receive care that is not only effective but also ethical and fair.
What Can Patients Learn from This?
For individuals seeking mental health services—especially through virtual platforms—this case serves as a critical lesson in being cautious and well-informed. It’s important to understand the terms of service, especially cancellation policies, and to be aware of how companies may manipulate online reviews to create a false narrative about their services.
Patients should also be vigilant in reading reviews from multiple sources and seek recommendations from trusted sources, rather than relying solely on a company’s marketing materials or doctored reviews. Knowing your rights and holding companies accountable for their actions is essential in ensuring that you receive the best care possible.
Moving Forward: A Call for Industry-Wide Change
As Cerebral works to recover from this scandal, the broader mental health and telehealth industries must learn from this misstep. The future of mental health care depends on creating a space that is transparent, accountable, and truly patient-centered. Hopefully, this case will inspire other companies to adopt ethical practices and for regulators to strengthen protections for consumers in the mental health space.
While Cerebral’s actions have tarnished its reputation, it is possible for the company to recover if it genuinely commits to reform. However, this case serves as an important reminder that, when it comes to mental health care, transparency and integrity are paramount.
