Telemarketers banned from selling healthcare-related products

Consumers seeking health insurance were allegedly cheated out of millions of dollars

If you get a phone call from someone trying to sell you health insurance -- hang up! You could be the target of a costly scam.

Under a settlement with the Federal Trade Commission (FTC), telemarketers who allegedly tricked consumers into buying purported health insurance are permanently banned from selling healthcare-related products. Among consumers being targeted are those who are uninsured, unemployed, or have pre-existing medical conditions.

Last September, the FTC charged Roy D. Hamilton and his wife, Judy M. Hamilton, and their companies, Health Service Providers, Inc., Magnolia Health Management Corporation, Magnolia Technologies Corporation, and Fav Marketing Inc. (HSP defendants), with fraudulently selling bogus health insurance for the Independent Association of Businesses (IAB).

Predatory marketing

The HSP defendants allegedly called consumers who had submitted their contact information to Websites that claimed to offer quotes for traditional health insurance or equivalent coverage.

According to the FTC, after paying an initial fee ranging from $50 to several hundred dollars and a monthly fee ranging from $40 to $1,000, consumers eventually learned they had not purchased comprehensive health insurance, but were deceived into buying an IAB membership that supposedly provided discounts on services such as golf, travel, and some limited health related services and insured benefits.

In addition to the ban against selling healthcare-related products, the settlement order prohibits the HSP defendants from misrepresenting material facts about any goods or services, selling or otherwise benefiting from consumers’ personal information, and from violating the FTC’s Telemarketing Sales Rule, including calling consumers on the Do Not Call Registry.

The order also imposes an $11.8 million judgment that has been suspended following the HSP defendants’ surrender of assets to the FTC.

Continuing legal action

Litigation continues against the remaining defendants behind the allegedly fraudulent health insurance scheme: IAB Marketing Associates LP, Independent Association of Businesses, HealthCorp International Inc., JW Marketing Designs LLC, International Marketing Agencies, LP, International Marketing Management LLC, Wood LLC, James C. Wood, James J. Wood, Michael J. Wood, and Gary D. Wood.

The FTC has also sought to amend its complaint against the remaining defendants in the case, adding two individuals as relief defendants who allegedly benefited from the scheme but did not participate in it.

Story provided by ConsumerAffairs.
Consumer Affairs

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