The Federal Trade Commission (“FTC”) recently prevailed in a deceptive marketing practices investigation involving Partners In Health Care Association (“PIHC”) and its owner. The judgment obtained by the FTC provides for, among other things, a monetary penalty of nearly $9 million and a prohibition against PIHC and its owner from selling healthcare products, as well as any future telemarketing of any good or service.
What was the nature of PIHC’s alleged deceptive marketing campaign?
The FTC had accused PIHC of running a marketing campaign in which it sold medical discount cards to consumers under the false pretense that PIHC was actually selling health insurance. PIHC was alleged to have targeted the most vulnerable consumers in need of health insurance through telemarketing, Spanish-language radio advertisements, television advertisements and Internet ads. PIHC was also accused of falsely claiming that its health insurance plans provided comprehensive insurance at a low cost, luring consumers into paying an upfront enrollment fee and a monthly payment which could cost up to several hundred dollars. It was only upon receipt of the written materials describing the purchased product (which was often received after the time to receive a refund had lapsed) that most consumers realized that PIHC had not actually sold them health insurance.
Best Practices to Avoid a Deceptive Marketing Practices Lawsuit
As we have previously blogged, federal authorities and state attorneys general alike have been active in investigating and prosecuting companies for deceptive advertising and marketing practices. Though the foregoing example may involve more sinister motives than those of the typical marketer, the vigorous efforts of the FTC nevertheless serve to reinforce the reality that it is necessary to provide accurate representations in the marketing of any good or service. Advertisers face a wide range of legal risks in today’s regulatory climate. Therefore, before undertaking a marketing campaign, it is imperative to engage knowledgeable counsel to ensure that your marketing practices and procedures are fully compliant with all applicable laws, rules and regulations.