Shares of Hims & Hers Health fell sharply by 10% after the Federal Trade Commission (FTC) filed a lawsuit against the company, alleging that it misled consumers about privacy protections, billing practices, and subscription cancellations.
The FTC, along with Los Angeles County and Utah, claims that Hims & Hers shared sensitive health information with advertising platforms like Meta Platforms and Snap Inc. through tracking technologies on its website, contradicting its promises to safeguard user data.
Additionally, the FTC alleges that the company charged customers for prescriptions before they had consultations with healthcare providers, billing them after merely completing an intake form. The lawsuit also highlights difficulties users faced when attempting to cancel subscriptions.
In response, Hims & Hers denied the allegations, asserting that the lawsuit ignores substantial evidence from a nearly three-year investigation and claiming it will vigorously defend itself. This lawsuit follows a series of probes into the company's practices, including its advertising strategies and the use of compounded weight loss drugs.
In April, the FTC communicated its findings to Hims & Hers, leading to settlement discussions, and in May, the company disclosed a $15 million probable-loss accrual related to the investigation, warning that the final costs could be significantly higher.
The escalation of this dispute through the lawsuit raises concerns about the company's future, particularly as it has positioned itself as a leading player in the growing telehealth market for weight loss medications and other treatments