FTC warns 25 insurance brokers not to engage in deceptive marketing for ACA plans
The Federal Trade Commission (FTC) has issued a warning to 25 companies that “market or generate sales leads for healthcare plans,” warning them they’re on notice to follow federal regulations or face action from regulators.
Targeted recipients, who were not named in the FTC’s open letter, represent brokerages or firms linked to “health insurance or other healthcare products” sold on the Affordable Care Act (ACA) marketplace, including comprehensive medical plans, limited indemnity plans and discount programs.
The agency added that it will be sending more letters as open enrollment continues through December, with further warnings about “deceptive or unfair claims” that could misinform consumers or drive people to health plans that do not meet their needs.
As the agency noted, when a patient isn’t properly covered or fully informed about the limitations of their insurance, that ultimately leads to unexpected bills and raises the cost of healthcare delivery for everyone.
“Making healthcare more transparent and affordable is a top priority for the FTC,” Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said in a statement. “Americans experiencing rising healthcare costs should not also have to worry about whether a healthcare plan or program is what it claims to be.”
“The FTC will remain focused on monitoring this market and will not hesitate to hold accountable companies that unlawfully market or advertise healthcare plans to consumers. Today’s letters remind companies that open enrollment is not an invitation to misrepresent what their plans actually cover.”
Based on information the FTC said it collected related to problems associated with low-quality plans and deceptive marketers operating on ACA exchanges, it listed four common violations of federal law:
- Misrepresenting or hiding the limitations of a health plan.
- Labeling insurance coverage as comprehensive when it is not.
- Failing to be upfront about costs, including premiums, copays and coinsurance.
- Offering rebates, free cash, and rewards to enrollees that are not in fact delivered.
Companies receiving the letter are not being accused of a crime. Instead, the FTC said it is putting them “on notice,” as a warning that it’s watching how business operations unfold.
Limitations on robocalls
A key area of focus is the marketing tactics themselves, which include phone calls and text message outreach, that are often “unsolicited” and contain “pre-recorded messages” to entice Americans to sign up for health coverage.
The FTC added that it has received complaints over these “robocalls,” which often aim to “charge consumers for products without express, informed consent.”
“The Telemarketing Sales Rule also prohibits calling consumers who have placed their phone number on the National Do Not Call Registry, absent consent or other narrow exceptions,” the FTC wrote in the letter.
The agency added that its list of complaints is not exhaustive, and there are other ways brokerages and marketing groups can run afoul of federal regulations. It recommended that all companies in the space take time to ensure they are compliant, or face potential penalties stemming from a lawsuit.
“We encourage you to conduct a comprehensive review of your marketing and advertising practices—including paid or other online ads, representations made on your websites, on social media, in promotional materials and communications, and through third-party distributors, marketing affiliates, and sales agents—to ensure compliance with all applicable laws, including those identified above,” the FTC wrote.
Open enrollment began in November and ends on Dec. 15. New medical coverage decisions for all Americans will go into effect on Jan. 1.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.