Companies Ordered to Pay $145 Million for Alleged Deceptive Health Insurance Marketing
The Federal Trade Commission (FTC) has announced settlements with two healthcare companies to resolve claims that they misled consumers seeking health insurance. In both cases, the companies were alleged to have deceived consumers seeking comprehensive health insurance into purchasing plans that did not provide the claimed level of coverage. The companies will pay a total of $145 million to the FTC to resolve the two complaints.
The biggest financial penalty was imposed on Assurance IQ, LLC, a Seattle-based company that sells short-term medical (STM) plans, limited benefit indemnity (LBI) plans, and supplemental healthcare plans, including vision and dental discount plans. According to the FTC complaint, Assurance’s telemarketers overstated the coverage provided by its policies. Most of the plans were sold on behalf of Benefytt Technologies, which was a third-party distributor of healthcare products for various carriers. Assurance received over $100 million in commissions for selling the policies on behalf of Benefytt. The FTC previously filed a complaint against Benefytt alleging deceptive acts and practices, which was resolved in 2022.
Assurance generated leads through its website, offering free quotes for affordable health insurance, as well as obtaining leads from third-party lead generators, and its outbound telemarketers contacted those consumers to sell them insurance products. The Assurance website stated that its insurance products were equivalent to comprehensive health insurance and that it worked with leading health insurers such as Aetna, Humana, and Kaiser Permanente, but it did not sell any of their insurance products, and the policies sold to consumers did not provide comprehensive insurance coverage.
Its telemarketers were alleged to have misrepresented the features of the plans, leading consumers to believe they were purchasing comprehensive health insurance, when that was not the case. Consumers were also told they had coverage for pre-existing health conditions, when that was not the case, and there were other significant coverage restrictions. Consumers were also told there were no caps on benefits, but the policies had significant restrictions. The $100 million judgment resolves claims that Assurance violated the Telemarketing Sales Rule (TSR). Assurance has been prohibited from making express and implied misrepresentations to consumers and must have competent and reliable evidence to substantiate any claims about coverage.
The second settlement resolves a complaint against Los Angeles, CA-based MediaAlpha, Inc. and its operating subsidiary QuoteLab, which uses websites and online ads claiming to provide health insurance quotes. The leads generated are sold to telemarketers. According to the FTC, MediaAplpha sold 119 million consumer leads in 2024.
The FTC alleged the company used website domains with names that implied they were associated with the government, and claimed consumers could buy low-cost, comprehensive health insurance that complies with the Affordable Care Act. The company hired actors, celebrities, and a doctor for product promotion, including a fictitious government “Health Insurance Give Back Program,” and claimed that millions of Americans qualified for a health plan that cost $1 per day.
MediaAlpha’s partners used robocalls and telemarketing calls, including to people on the Do Not Call Registry, offering comprehensive low-cost health insurance coverage, but the health care plans provided by its partners rarely included the low-cost, comprehensive health insurance plans that consumers were promised.
The FTC alleged that MediaAlpha was in violation of the FTC Act, TSR, and Impersonation Rule, and obtained a $45 million consent judgment. MediaAlpha is prohibited from making misleading and false claims about the products it offers, must hand over the misleading domains it used, must monitor its partners to ensure they comply with the law in the future, and must obtain consent from consumers before selling or disclosing their personal information.
