A company that lured low income consumers with no insurance into spending $199 by making alleged deceptive claims that they would receive free prescription medications has agreed to settle Federal Trade Commission charges that its marketing violated federal law. In addition to prohibiting deceptive claims, the settlement bars My Free Medicine and its principal from accepting payment from consumers without first providing a clear and conspicuous written notice that discloses the terms and conditions of their services. The settlement also contains a suspended $500,000 judgment.
In September 2005, the FTC charged that the defendants targeted low income consumers who spent more than $100 a month for medications and who might qualify to receive free prescription medicine through one or more of the many patient assistance programs – PAPs – operated by pharmaceutical companies. The PAPs impose varying eligibility requirements on consumers and not all drugs are available through these programs. Those that are may only be available for limited times, or in certain doses.
The complaint alleges that defendants used radio and TV ads to urge consumers who were not covered by insurance to call a toll-free number to find out if they were “eligible” to receive free prescription medications. Defendants’ sales reps routinely told consumers that they were eligible to receive free prescription medication and that their medications were available through their program. The sales reps also told consumers that the company dealt directly with pharmaceutical companies and the federal government to obtain free prescription medications for consumers, and that the company would provide the medication directly to the consumers or to their doctors. In fact, the company simply provided consumers with PAP application forms that had to be submitted to the pharmaceutical companies. After paying $199.95 for a six-month enrollment in defendants’ program, many consumers learned that they were not eligible to receive their prescription medications for free from a PAP, or that their prescriptions were not available from a PAP.
At the request of the FTC, a U. S. District Court in Seattle, Washington, ordered a halt to the deceptive claims, and froze the defendants’ assets, pending trial. The settlement announced today resolves that litigation.
The settlement imposes a permanent prohibition on deceptive claims about any medical services program, including claims about eligibility for PAP programs, availability of specific medications, the assistance the defendants provide, and their refund policy. It also bars the defendants from accepting payment from consumers without first providing a clear and conspicuous written notice that discloses the terms and conditions of their services and informs consumers that they can access PAPs directly, that the defendants only provide assistance in applying for PAP benefits, that PAPs set their own eligibility requirements, and that payment of a fee to the defendants does not guarantee that a consumer will receive medication from a PAP. The settlement also requires that defendants disclose, in writing, the terms and conditions of their refund policy.
The settlement imposes a judgment of $500,000, which has been suspended based on the defendants’ inability to pay. Should the court find that the defendants misrepresented their financial condition, the entire $500,000 will become immediately due and payable.
Finally, the settlement contains standard record-keeping and other provisions to allow the agency to monitor compliance with its order.
The defendants in this case are MyFreeMedicine.com, LLC (“MFM”) and its principal Geoffrey Hasler. They are based in Louisville, Kentucky.
The case was filed in the U.S. District Court for the Western District of Washington at Seattle.
NOTE: Stipulated Final Judgments and Orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.
Copies of the complaint and stipulated permanent injunction and final judgment are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.
Claudia Bourne Farrell,
Office of Public Affairs
FTC Northwest Region
(FTC File No. X050070)