NextMed faces FTC sanctions for deceptive practices, bogus reviews

WASHINGTON, D.C. (FTC.GOV) — The operators of telemedicine company Southern Health Solutions, Inc., doing business as Next Medical and NextMed, have agreed to settle the Federal Trade Commission’s charges that they used deceptive cost and weight loss claims, as well as fake reviews and testimonials to lure consumers into buying their weight-loss membership programs that had hidden terms and conditions.

In its complaint, the FTC alleges that New York-based NextMed, its founders Robert Epstein, and CEO Frank Leonardo III sold telehealth weight-loss programs providing access to medical providers who could prescribe popular glucagon-like peptide 1 agonist (GLP-1) weight-loss drugs, such as Wegovy and Ozempic, that were the subject of skyrocketing interest when NextMed began offering its weight-loss programs in early 2022. NextMed sold its membership programs at an advertised monthly price, typically at $138 or $188, without adequately disclosing that the price did not include the cost of the actual GLP-1 drug, the cost of the lab work required to determine eligibility for such drugs, or the cost of the consultation with a medical provider that was necessary to obtain a prescription.

The complaint also alleges that NextMed failed to adequately disclose that its membership programs had a required one-year commitment with early termination fees, and that many customers who called to cancel or request refunds faced significant delays in resolving their complaints due to NextMed’s insufficient customer service staffing and capacity.

The FTC also alleged that the company suppressed negative reviews on Trustpilot by selectively challenging critical reviews, offering Amazon gift cards to consumers to remove or change negative reviews, and by conditioning refunds on consumers’ agreement to remove negative reviews. In addition, the complaint alleges that the company generated fake positive reviews that were posted on Trustpilot and used testimonials and before-and-after photos from people who were not NextMed clients and had not used GLP-1 drugs for weight loss.  

“Consumers who signed up for NextMed’s programs faced significant unexpected costs and the company’s customer service failures prevented consumers from cancelling or getting a refund,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “Today’s action makes clear that companies cannot hide important information from consumers or neglect their responsibility to respond to valid complaints and concerns.”

In its complaint, the FTC alleges that NextMed, Epstein and Leonardo:

• lured customers with unsubstantiated weight loss claims that members of its weight-loss programs lose 53 pounds and 23% of their body weight on average;
• used deceptive before and after photos of people who were not their customers in its marketing materials;
• published fake testimonials created by hired individuals, employees, and family members who did not use NextMed’s programs or GLP-1 drugs;
• distorted consumer reviews by flagging negative reviews without a basis, selectively soliciting positive reviews from satisfied customers, and providing refunds or gift cards in exchange for customers changing or removing negative reviews;
• failed to adequately disclose the terms of its membership programs, including the 12-month commitment and early termination fee;
• failed to process consumers’ cancellation and refund requests in a timely manner due having insufficient staffing and capacity to handle those requests; and
• failed to obtain informed consent to charge consumers

In addition to requiring NextMed and its principals to pay $150,000, which is expected to be used to provide refunds to consumers, the proposed consent order:

• prohibits them from misrepresenting the cost of telehealth services, including what is included in that cost, the timing or manner of billing or any charge, that a consumer authorized a transaction or is obligated to pay a charge, or material information relating to refund and cancellation policies;
• requires competent and reliable evidence to support claims about the average or typical results users will achieve;
• prohibits misrepresentations that reviews are truthful or from real consumers, and requires disclosure of any unexpected material connection with endorsers or reviewers;
• prohibits manipulation of reviews, including selectively soliciting reviews from consumers more likely to provide positive reviews, offering payments or incentives to consumers to remove or edit negative reviews, and reporting or disputing negative reviews as false or suspicious without a reasonable basis for doing so;
• requires them to obtain informed consent before billing consumers and authorization to use any electronic fund transfer; and
• requires them to clearly disclose important terms relating to refunds or cancellations before consumers are asked to pay, provide a simple way for consumers to request cancellations or refunds, and to promptly honor any cancellation or refund requests that comply with policies that were in effect at the time of purchase.

The Commission vote to issue the administrative complaint and to accept the proposed consent agreement was 3-0.

The FTC will publish a description of the consent agreement package in the Federal Register soon. The agreement will be subject to public comment for 30 days after publication in the Federal Register, after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments will appear in the published notice. Once processed, comments will be posted on Regulations.gov.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $53,088.

The staff attorney on this matter is Christine DeLorme of the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission works to promote competition and protect and educate consumers. The FTC will never demand money, make threats, tell you to transfer money, or promise you a prize. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.