What You Should Know:
– The Federal Trade Commission (FTC) has reached a settlement with Southern Health Solutions, Inc., operating as Next Medical and NextMed, and its founders Robert Epstein and CEO Frank Leonardo III.
– The FTC’s charges allege the telemedicine company used deceptive cost and weight loss claims, fake reviews, and undisclosed terms to lure consumers into their weight-loss membership programs.
Deceptive Weight-Loss Claims and Hidden Fees
According to the FTC’s complaint, NextMed sold telehealth weight-loss programs offering access to medical providers who could prescribe popular GLP-1 weight-loss drugs like Wegovy and Ozempic. These drugs had seen skyrocketing interest when NextMed began offering its programs in early 2022. The complaint details several deceptive practices:
- Hidden Costs: NextMed advertised monthly prices (typically $138 or $188) without adequately disclosing that these prices did not include the cost of the GLP-1 drug itself, the required lab work for eligibility, or the medical provider consultation necessary to obtain a prescription.
- Undisclosed Terms: The company allegedly failed to disclose a mandatory one-year commitment for its membership programs, which included early termination fees.
- Poor Customer Service: Many customers attempting to cancel or request refunds reportedly faced significant delays due to NextMed’s insufficient customer service staffing and capacity.
- Fake Claims and Testimonials:
- NextMed is accused of luring customers with unsubstantiated weight loss claims, such as users losing “53 pounds and 23% of their body weight on average.”
- The company allegedly used deceptive “before and after” photos of individuals who were not NextMed customers and had not used GLP-1 drugs for weight loss.
- Fake positive testimonials, created by hired individuals, employees, and family members who did not use the programs or drugs, were allegedly published.
- Review Manipulation: The FTC alleged that NextMed distorted consumer reviews by:
- Flagging negative reviews on Trustpilot without a valid basis.
- Selectively soliciting positive reviews from satisfied customers.
- Offering Amazon gift cards or conditioning refunds on consumers’ agreement to remove or change negative reviews.
$150k Settlement Terms and Future Requirements
In addition to requiring NextMed and its principals to pay $150,000, which is expected to provide refunds to consumers, the proposed consent order mandates several key changes:
- Prohibition on Misrepresentation: The company is prohibited from misrepresenting the true cost of telehealth services, including what is covered, billing practices, consumer authorization, and refund/cancellation policies.
- Evidence-Based Claims: NextMed must now provide competent and reliable evidence to support any claims about typical or average user results.
- Authentic Reviews: They are prohibited from misrepresenting that reviews are truthful or from real consumers and must disclose any material connection with endorsers or reviewers.
- Ban on Review Manipulation: Explicitly prohibited actions include selectively soliciting positive reviews, offering incentives for negative review removal/editing, and disputing negative reviews without a reasonable basis.
- Informed Consent for Billing: The company must obtain informed consent before billing consumers and authorization for any electronic fund transfers.
- Clear Cancellation/Refund Policies: Important terms regarding refunds or cancellations must be clearly disclosed before payment. They must also provide a simple cancellation/refund process and promptly honor valid requests.
The Commission vote to issue the administrative complaint and accept the proposed consent agreement was 3-0. The FTC stated it will publish a description of the consent agreement package in the Federal Register for a 30-day public comment period, after which a final decision will be made.
