The Federal Trade Commission (FTC) announced a settlement with NextMed parent company Southern Health Solutions, Inc., in response to allegations that the telemedicine platform offered deceptive claims and fake reviews to lure consumers into buying its programs.
The FTC charged that NextMed and its founders sold fixed-term weight-loss memberships that provided access to GLP-1 drugs and deceptively advertised costs and expected weight loss outcomes. The case marks the first consumer protection action brought by the Andrew Ferguson-led FTC focused on marketing and membership billing practices in the healthcare space.
The FTC's recently vacated Negative Option Rule would not have applied here because NextMed sold a fixed‑term membership rather than a negative option plan, and the Restore Online Shoppers' Confidence Act (ROSCA), which governs negative option features, was likewise not at issue.
Instead, the FTC relied on its authority under Section 5 of the FTC Act and the Electronic Fund Transfer Act (EFTA) to address deceptive advertising, undisclosed material terms, and inadequate consent and cancellation practices, demonstrating the agency's commitment to regulating membership services and recurring billing practices under other enforcement mechanisms.
FTC Alleged Misleading Pricing and Hidden Terms
According to the complaint, NextMed advertised monthly membership fees of $138 or $188 as covering the full cost of its weight-loss programs, including medication refills, consultations, and lab testing. In reality, the advertised prices excluded significant additional costs for the GLP-1 drug itself, the lab work required to determine eligibility for the medication, and the consultation with a medical provider necessary to obtain a prescription.
The FTC further alleged that NextMed failed to disclose other material terms on its enrollment page before consumers provided their payment information, including locking customers into a 12-month membership commitment with an early termination fee equal to one month of the program's cost. As a result, many consumers were billed for services they did not fully understand they had agreed to purchase, causing substantial financial harm.
The complaint also stated that customers who attempted to cancel their memberships or request refunds encountered substantial obstacles and delays, and some customers continued to be billed even after making cancellation attempts. According to the FTC, these obstacles were deliberately designed by the company to make cancellation difficult.
FTC Alleged Unsubstantiated Claims and Fake Reviews and Endorsements
The FTC also alleged that NextMed made unsubstantiated claims about the typical results patients could expect, including claims that consumers could lose an average of 53 pounds or 23% of their body weight.
In addition, many testimonials and endorsements for the programs did not reflect the actual experiences and opinions of impartial NextMed customers. NextMed allegedly advertised before and after weight-loss photos of individuals who were not program participants; published fake testimonials written by employees, family members, and paid individuals who had not used NextMed's programs or GLP-1 drugs; and suppressed negative consumer reviews on Trustpilot. The company also challenged negative reviews without a valid basis, solicited positive reviews from satisfied customers, and offered refunds or Amazon gift cards to customers who agreed to change or remove their negative reviews.
FTC Alleged Violations of the Electronic Fund Transfer Act
The complaint also alleged violations of the Electronic Fund Transfer Act (EFTA) and its implementing Regulation E, which constitute a violation of the FTC Act. NextMed allegedly debited consumers' bank accounts on a recurring basis without obtaining properly signed or similarly authenticated written authorization for preauthorized electronic fund transfers and failed to provide consumers with a copy of the authorization, as required by the EFTA and Regulation E.
NextMed and its founders agreed to pay $150,000, which the FTC intends to use for consumer refunds. The stipulated order prohibits the company from misrepresenting the cost of services, misrepresenting that reviews are truthful or from real customers, failing to clearly disclose material terms relating to refunds or cancellations before collecting consumers' billing information, manipulating or suppressing reviews, and charging consumers without obtaining their informed consent. Notably, the FTC did not explain in either the settlement announcement or order the basis for the monetary recovery, leaving unclear whether it reflects estimated consumer harm, disgorgement, or a negotiated resolution.
With the telemedicine and virtual weight‑loss programs market expanding rapidly, this case shows the FTC beginning to address health‑related advertising and marketing practices in this growing space. Companies providing online health and wellness services should ensure that medical outcome claims are substantiated, reviews and testimonials accurately reflect the services provided, all material terms are clearly disclosed before charging consumers, and consumers can easily cancel memberships.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.