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FTC Cracks Down on Medical Telemarketing Fraud

June 20, 2012
By Jacqueline Lee - Contributing Writer

Even though many Americans dislike the Affordable Care Act, the high cost of health insurance has everyone searching for cheap coverage. Unscrupulous telemarketers have sought to cash in on the need for health insurance by offering “medical discount plans” to unsuspecting customers.

Recently, the FTC cracked down on one of those “medical discount plan” providers. Health Care One and its affiliates marketed their plans as government-endorsed health insurance. Unfortunately, the plans were not health insurance, were not accepted by providers and did not provide promised discounts to customers.

According to the FTC (News - Alert), Health Care One promised that their plan was widely accepted in local communities when, in fact, few medical providers accepted the plan. In their television and radio ads, Health Care One promised 100 percent satisfaction and a money-back guarantee.

Unfortunately, when customers realized that they had not purchased health insurance, and when they sought refunds, they found it difficult or impossible to cancel their membership and to obtain refunds for the product.

In their settlement agreement with the FTC, Health Care One and three affiliates agreed to never again sell goods or services related to healthcare. They also agreed to never violate the Telemarketing Sales Rule (TSR (News - Alert)), which prohibits telemarketers from calling customers who ask to be put on “Do Not Call” lists. The TSR also requires businesses to disclose any material information about a product that could affect a customer’s purchasing decision.

The FTC recommends several steps that will help consumers to avoid fraud and to investigate the details of medical discount plans. First, customers should ask the company for a list of providers who participate in the plan. Second, customers should ask for a website where they can learn additional information about the product.

This video details some of the warning signs to look out for from telemarketing scams.

In addition to investigating the plan carefully, the FTC recommends calculating what the total discount plan payment will be for a period of time. The FTC also recommends contacting a local consumer protection office, Attorney General or the Better Business Bureau to find out about the company’s complaint history.

In addition to complying with settlement instructions, Health Care One officials had to surrender assets from the sale of an Aston Martin, a Maserati, a yacht and two motorcycles.

Edited by Juliana Kenny