So last week TCPAWorld.com broke the news the FTC had hammered two insurance lead generators with a $145MM penalty ($100MM against Assurance IQ and $45MM against Media Alpha) for alleged fraud in connection with lead gen in the insurance vertical.
While the amount of the penalty was stunning, there are two major lessons here folks in the lead generation community need to understand RIGHT NOW.
First– what did Assurance IQ and Media Alpha actually do wrong? Per the FTC “Assurance and MediaAlpha deceived consumers and led them to purchase plans that did not provide the promised health care coverage, and bombarded consumers with telemarketing and robocalls.” But what exactly did they do?
The Alleged Wrong Doing (Learn From This)
Assurance
As to Assurance, the FTC claims it “made deceptive statements to consumers about the health plans’ actual costs and benefits, including that they provided coverage for preexisting conditions, did not have caps on benefits, allowed access to medical provider networks that would lower consumers’ costs significantly, and incorporated supplemental products.”
Importantly, er the complaint, Assurance sold most of these plans on behalf of Benefytt Technologies, formerly known as Health Insurance Innovations (“Benefytt”). But Benefytt was not an insurer; rather it acted as a third-party distributor of healthcare-related products for various carriers. Assurance performed the marketing and selling of these plans on Benefytt’s behalf, and Benefytt paid over $100 million dollars in commissions and bonuses to Assurance in return
Benefytt itself was previously hammered by the FTC— then they moved upstream to Assurance– pretty scary stuff.
But also important to keep in mind– because what Assurance really did wrong, perhaps, was work with a company that was on the FTC’s hit list. Once Benefytt did wrong it was just a matter of time before Assurance received a knock on the door also.
Other key alleged misdoings for Assurnace:
- Consumers who visited Assurance’s website and entered their contact information
would typically receive a call from its telemarketers who, in numerous instances, stated they were calling from a “national health enrollment center,” and that their system “will be searching ALL the carriers in __ (say the state they live in).” In fact, the Defendant has sold only a limited number of plans from just a handful of providers and did not disclose this fact to consumers. - Contrary to these representations, the claimed repricing benefit was not actually included in the STM and LBI plans that Assurance has sold, but instead it would come to consumers through a Supplemental Product, the existence and separate price of which was often not disclosed to the consumer during the sale.
- .In many instances, Assurance and its telemarketers have not clearly disclosed during sales that the Supplemental Products were separate products with separate monthly fees. Based on the way Assurance’s telemarketers have presented the STM, LBI, and Supplemental Products, consumers often were not aware that they were purchasing the Supplemental Products at all.
- Assurance promised maximum out of pocket numbers to consumers without disclosing that the payable benefit from the plan was actually limited for major healthcare items– like surgeries– so the maximum out of pocket claim was illusory.
Media Alpha
While the Assurance complaint focused on the statements directly made by Assurance and its telemarketers, the complaint against Media Alpha focused on its paid search and social media activities– and this is critical for folks to understand.
The FTC took issue with the claims of videos and adverts the company ran to draw people to its website.
For instance the FTC was concerned with:
- Defendants’ marketing videos have featured clips of U.S. presidents speaking about healthcare or low-cost insurance, leading consumers to believe that Defendants are affiliated with government healthcare programs and offer low-cost, comprehensive health plans.
- Celebrity endorsements for a program that never really existed: “Hey it’s Floyd Money Mayweather, do you need health insurance? Then you want to hear this $29 per month health insurance hack. It’s called the Health Insurance Give Back Program and 90% of uninsured Americans qualify. It covers preexisting conditions, prescriptions, catastrophic, dental for your kids, and more. Trust me. It takes only 15 minutes and can change your life. Make the 15 minute call right now.”
In some instances Media Alpha was hit with conduct by its lead genrators- not conduct it engaged in directly. For instance:
- one of Media Alpha’s largest lead suppliers (unnamed) ran deceptive advertisements for nonexistent “Trumpcare” insurance on Google and Facebook.
- Defendants’ telemarketer demand partners frequently further Defendants’ deception when they make their sales pitch. In many instances, the telemarketer partners have introduced themselves to consumers in a deceptive way, including by saying that they work at the “National Enrollment Center” or something similar, implying an affiliation with a government marketplace.
- Defendants also pay affiliate marketing partners to drive traffic to Defendants’ lead generation websites using similar deceptive government affiliation claims. Defendants could reject misleading text implying a government
affiliation, as they reserve the right to review and reject or cancel any
advertisement in their contracts with partners, but they often do not do so.
Notice, all of this stuff is fairly common in lead generation circles– especially when it comes to selling Obamacare. So this is a shot across everyone’s bow.
The Other Thing They Did Wrong– They Hired #BigLaw
We can all agree these two results are INSANE.
And neither company really even put up a fight. AS SOON AS THE COMPLAINT WAS FILED THEY HAD ALREADY GIVEN UP!!!!!
Troutman Amin, LLP represents companies in government investigations and civil actions routinely and you will NEVER see something like this. Indeed we commonly have government agencies WALK AWAY or IMPOSE ONLY NON-MONETARY restrictions.
But when you hire #biglaw you are asking for a big loss.
These guys are weak. Totally unequipped to fight. And ALWAYS looking to bail out.
Many of the claims in the complaint don’t even add up– and the fact that these companies rolled over without a fight sickens me.
It implies that everything in these complaints is actually bad behavior– not all of it was– and it only emboldens the FTC (and other agencies) to pick on actors in the space.
Simply INSANE to me that these companies would make the choice to retain biglaw to represent them here and then get “counseled” to roll over and pay MASSIVE MASSIVE fines WITHOUT EVEN FIGHTING.
INSANE.
INSANE.
INSANE.
SICKENING.
SICKENING.
ISNANE.
I am done.
For now.
But seriously folks if you are facing something like this CALL US before you retain a #biglaw firm. They WILL let you down– I can say that confidently because they ALWAYS do. Just look at these results.
WHAT’S NEXT?
So a few take aways here:
- Perhaps most importantly ATTEND CONTACT.IO. I will be speaking there at the big show and I will be breaking this down. We will also have some content up on the YouTube channel about this shortly;
- If you worked with companies who have been hit with FTC penalties in the past you may be on the hit list next!;
- Do not deceive consumers during your outbound calls and do not let your affiliate network do so– YOU MUST MONITOR THEIR BEHAVIOUR!!;
- Do not deceive consumers in your paid search or social media content and do not let your affiliate network do so– YOU MUST MONITORY THEIR BEHAVIOUR!!;
- And please, for the love of god, DO NOT RETAIN #BIGLAW in these cases– they will sell you down the river and make a deal because they are AFRAID TO FIGHT.
The end.