In July, the Federal Trade Commission (“FTC”) announced that telemedicine company NextMed agreed to pay $150,000 to settle charges that it deceptively advertised its GLP-1 weight-loss membership programs to consumers. The FTC’s complaint alleged a host of deceptive practices under Sections 5 and 12 of the FTC Act, including making unsubstantiated weight-loss claims, disseminating fake testimonials and consumer reviews, failing to adequately disclose the terms of its memberships, and purposefully making it difficult for consumers to cancel their memberships.

NextMed’s Unsubstantiated Weight-Loss Claims

With this action, the FTC reconfirmed its interest in substantiation for health claims. According to the complaint, NextMed claimed that its members lost on average 53 pounds and 23% of their body weight by participating in their GLP-1 weight-loss programs. The FTC alleged that NextMed lacked a “reasonable basis” for these claims because they did not maintain records of their members’ weight loss. The FTC argued that, absent these records, NextMed did not have a reasonable basis for assuming that its members achieved weight-loss results comparable to those of individuals in GLP-1 clinical trials.

NextMed’s Fake Testimonials and Consumer Reviews

In addition, the FTC reaffirmed its scrutiny of consumer testimonials and reviews. The FTC alleged that NextMed disseminated fake testimonials to consumers by featuring paid actors who had not used NextMed’s services in its advertisements. Some of the photos used by NextMed in its testimonials were submitted by individuals who responded to ads on Craigslist to provide before-and-after weight-loss photos. Additionally, the FTC alleged that NextMed distorted consumer reviews on third-party review website Trustpilot by submitting fake positive reviews and offering Amazon gift cards to customers to modify or remove negative reviews.

NextMed’s Failure to Disclose its Membership Terms

The FTC demonstrated its continued focus on clear disclosure of membership terms, even for programs that do not qualify as “negative options” under the Restore Online Shoppers’ Confidence Act (ROSCA) or the now-vacated Negative Option Rule.

The FTC alleged that NextMed charged consumers for its weight-loss membership without clearly disclosing the material terms of the program, including:

• the monthly fee did not include the cost of the weight-loss medication;
• the membership committed consumers to a one-year term with early termination fees; and
• consumers would be charged every 28 days despite advertised prices for the first “month.”

Instead, NextMed hid the material terms of its program in “inconspicuously hyperlinked” membership agreements.

NextMed’s membership was a one-year membership agreement, not a subscription that renewed indefinitely. Commissioner Slaughter asserted in 2021 that a similar structure “plainly violated the disclosure requirements of [ROSCA]” because “the consumer was enrolled in a payment plan that renewed automatically for recurring regular payments[.]” However, in issuing the Negative Option Rule last year, the FTC noted that “yearly contracts that do not auto-renew, but that apportion payments over 12 months for the convenience of consumers . . . are installment plans, and not negative option plans.” Consistent with that view, the FTC alleged no violation of ROSCA, but rather only Sections 5 and 12 of the FTC Act. The FTC’s focus on disclosure of membership programs that fall beyond ROSCA’s scope serves as a reminder of the importance of clear disclosures for such memberships—albeit without the threat of ROSCA’s civil penalties.

NextMed’s Difficult Cancellation Process

The FTC also alleged that NextMed violated the FTC Act by purposefully making it difficult for consumers to cancel or obtain a refund. The FTC cited a message from NextMed’s CEO to the customer service team stating, “Team, we really cannot cancel subscriptions unless people dispute [with their credit card company]. Even if somebody cancels, put it on pause. We can try and reactivate.” The FTC also alleged that NextMed failed to employ sufficient customer service personnel and failed to maintain adequate technological capacity to address consumer requests and complaints.

If you have any questions concerning the material discussed in this post, please contact the members of our Advertising and Consumer Protection Investigations practice.