The Federal Trade Commission has given final approval to a settlement order against telehealth company NextMed and its principals, requiring them to pay $150,000 and implement sweeping changes to their business practices after allegations they deceived consumers seeking popular weight-loss treatments.
The FTC's July complaint alleged that NextMed, along with executives Robert Epstein and Frank Leonardo, exploited the surging popularity of prescription glucagon-like peptide 1 agonist (GLP-1) drugs such as Wegovy and Ozempic to mislead consumers about their weight-loss programs.
According to the complaint, the company engaged in multiple deceptive practices designed to capitalize on consumer demand for these prescription medications. The FTC alleged that NextMed sold weight-loss programs while concealing actual costs and membership requirements from potential customers, making it difficult for consumers to understand the true financial commitment involved.
The agency also accused the company of making unsubstantiated claims about weight-loss results achieved by their clients. These allegedly false promises were supported by fabricated customer testimonials and manipulated consumer reviews, according to the FTC's allegations. The practice of using fake testimonials represents a violation of federal consumer protection laws that require advertising claims to be truthful and substantiated.
Beyond deceptive advertising, the FTC alleged that NextMed engaged in unfair billing and cancellation practices that harmed consumers. The company allegedly failed to obtain proper express informed consent before charging consumers' payment methods or setting up recurring automatic debits. This practice left many customers surprised by unexpected charges on their credit cards or bank accounts.
The complaint also detailed problems with NextMed's customer service operations. The FTC alleged that the company failed to process cancellation and refund requests in a timely manner, leaving frustrated customers unable to exit programs they no longer wanted or receive promised refunds.
The $150,000 monetary settlement will be used primarily to provide refunds to affected consumers, offering some relief to those who may have been harmed by the alleged deceptive practices. However, the financial penalty represents just one component of the comprehensive settlement order.
The final consent order imposes extensive operational requirements on NextMed and its executives going forward. The company is now prohibited from misrepresenting the costs of telehealth services, ensuring that consumers receive clear and accurate pricing information before making purchasing decisions.
Future weight-loss claims made by the company must be supported by competent and reliable evidence. This requirement aims to prevent the type of unsubstantiated promises that the FTC alleged were used to mislead consumers about expected results.
The order also addresses the company's review and testimonial practices. NextMed is prohibited from misrepresenting that reviews come from genuine consumers and must disclose any material connections with endorsers or reviewers. The company is also banned from manipulating customer reviews, ensuring that potential customers see authentic feedback about services.
Significant billing practice reforms are required under the settlement. NextMed must obtain informed consent before billing consumers and secure proper authorization before using electronic fund transfers. These requirements provide consumers with greater control over their financial commitments.
The order mandates clear disclosure of refund and cancellation terms before consumers are asked to pay. Additionally, NextMed must provide a simple method for customers to request cancellations or refunds and must promptly honor such requests when they comply with the company's stated policies.
The settlement reflects broader FTC enforcement efforts targeting deceptive practices in the rapidly growing telehealth industry. As consumers increasingly turn to online platforms for medical services, including weight management programs, regulators are scrutinizing companies that may exploit consumer trust and desperation.
The popularity of GLP-1 drugs like Ozempic and Wegovy has created a particularly active market for weight-loss services, with numerous telehealth companies offering programs that claim to help consumers access these medications. However, the high demand has also created opportunities for unscrupulous operators to mislead consumers about costs, results, and program requirements.
Following a public comment period, the Commission voted 2-0 to approve the final consent order. The unanimous approval demonstrates the FTC's commitment to protecting consumers in the evolving telehealth marketplace.
This enforcement action serves as a warning to other telehealth providers that deceptive advertising and unfair billing practices will face regulatory consequences. Companies operating in this space must ensure their marketing claims are substantiated and their billing practices are transparent and fair.
For consumers, the case highlights the importance of carefully reviewing terms and conditions before enrolling in telehealth programs, particularly those related to popular weight-loss treatments. The settlement requirements should provide NextMed customers with greater transparency and protection going forward.