FTC launches probe into mental-health startup Cerebral - WSJ

Signage is seen at the Federal Trade Commission headquarters in Washington, D.C.
Signage is seen at the Federal Trade Commission headquarters in Washington, D.C., U.S., August 29, 2020. REUTERS/Andrew Kelly/File Photo

June 14 (Reuters) - The U.S. Federal Trade Commission (FTC) has begun an investigation into SoftBank-backed mental-health startup Cerebral Inc, the Wall Street Journal reported on Tuesday, citing a letter the antitrust body sent to the company.

In the letter dated June 1, the FTC said it was investigating whether the company engaged in deceptive or unfair practices related to advertising or marketing of mental-health services, according to the WSJ report.

The letter asked Cerebral to preserve documents and also sought information related to programs where the company continues to bill customers a subscription fee until the customer cancels, the report said.

Cerebral declined to confirm the FTC probe but said it is cooperating with the antitrust body.

The FTC was not immediately available for comment.

The company said in December it had raised $300 million in a funding round led by SoftBank Vision Fund 2, lifting its valuation four-fold to $4.8 billion in less than six months after its last capital raise. read more

Cerebral provides mental health services, including consultation and prescription of medicines, through its telehealth platform.

Telehealth platforms' prescriptions have been under scrutiny, with Walmart Inc (WMT.N) and CVS Health Corp (CVS.N) last month saying they would stop filling prescriptions for controlled substances issued by telehealth startups Cerebral Inc and Done Health. read more

The WSJ last month reported that Cerebral had been issued a subpoena by federal prosecutors as part of an investigation into possible violations of the Controlled Substances Act.

Reporting by Leroy Leo and Kannaki Deka in Bengaluru; Editing by Shinjini Ganguli and Maju Samuel

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