Consumer Neurodevices and Regulatory Arbitrage: How "Wellness" Classification Undermines Brain Data Governance

Abstract

Consumer neurotechnology devices — wearable electroencephalography (EEG) headbands, transcranial stimulation kits, and neurofeedback platforms — are now marketed directly to individuals for sleep optimization, cognitive enhancement, and stress management, yet existing governance frameworks treat them as either medical devices subject to pre-market review or as unregulated general consumer products, with little institutional capacity to address the distinctive challenges of neural data capture outside clinical settings. This article argues that "wellness" classification functions as a form of regulatory arbitrage — a mechanism we term Wellness-Classification Arbitrage (WCA) — enabled not by firm strategy alone but by institutional interaction failure at the juncture of device classification regimes, oversight authorities, and data governance frameworks. We develop a governance chain model (Classification to Oversight Authority to Data Obligations to Enforcement), identify three dominant failure modes (classification escape, oversight fragmentation, and data governance mismatch), and construct a comparative regulatory-data governance matrix across United States, European Union, and United Kingdom jurisdictions. The resulting framework provides reusable diagnostic tools for scholars and regulators assessing whether consumer neurotechnology governance is substantively effective or merely formally adequate, while specifying the boundary conditions under which the arbitrage mechanism does not succeed.