Hims and Hers FTC lawsuit sends shares down more than 10%
The FTC sued Hims & Hers over alleged health-data sharing, billing and cancellation practices, pushing the telehealth stock lower.
By Jordan Bell · Startups & Deals Reporter
· 3 min read
Hims and Hers shares fell more than 10% Wednesday after the Federal Trade Commission filed a lawsuit accusing the telehealth company of deceptive privacy, billing and cancellation practices. For investors, the Hims and Hers FTC lawsuit adds regulatory risk to a company that has grown quickly by selling online access to prescriptions and wellness treatments.
The FTC, Los Angeles County and the state of Utah alleged that Hims & Hers shared sensitive health information from users with advertising platforms including Meta Platforms and Snap. The regulators said the company used tracking technologies on its website and that the data practices did not match the privacy protections Hims & Hers had promised customers.
Tracking technologies are tools that can collect information about what users do on a website and help companies measure or target advertising. In a health-care setting, regulators are paying close attention because the information can involve medical conditions, treatments or prescription interest.
Why did the FTC sue Hims and Hers?
The FTC’s complaint centers on three main allegations: health-data sharing, prescription billing and subscription cancellations. The agency said Hims & Hers failed to get proper consent before sharing sensitive user information with ad platforms, charged some customers before they had spoken with a medical provider, and made it hard for users to end subscriptions.
On billing, the FTC alleged that many customers were charged for prescriptions after completing an intake form, rather than after a consultation with a licensed health-care professional. Hims & Hers sells access to virtual care, meaning patients can complete online intake steps and connect with providers remotely instead of visiting a doctor’s office in person.
Regulators also alleged that Hims & Hers created obstacles for customers who wanted to cancel recurring subscriptions. Subscription rules have become a major focus for consumer-protection agencies because recurring charges can continue unless customers can clearly and easily stop them.
Hims & Hers denied wrongdoing in a post on X. The company said the lawsuit ignores evidence it provided during what it described as an almost three-year FTC investigation and said regulators were stretching the law to bring the claims. Hims & Hers also said it is confident in its position and plans to defend itself.
What does the lawsuit mean for Hims and Hers?
The case turns a long-running investigation into active litigation. The FTC investigation began in October 2023, according to CNBC, and the agency formally shared its findings with Hims & Hers in April. Settlement talks followed, according to company disclosures.
In May, Hims & Hers disclosed a $15 million probable-loss accrual tied to the matter and warned that the ultimate cost could be materially higher. The company said at the time that it had made a settlement offer without admitting wrongdoing.
The lawsuit lands as Hims & Hers has become a large player in telehealth, including in weight-loss treatments. The company offers virtual consultations and prescription access for categories including weight loss drugs, erectile dysfunction, hair loss and mental health medications, with products shipped directly to customers.
CNBC has reported on other scrutiny of Hims & Hers, including questions around its Super Bowl advertising and compounded weight-loss drugs. Wednesday’s lawsuit broadens the pressure on the company by putting its consumer-data, billing and subscription practices at the center of a government enforcement case.
This story draws on original reporting from CNBC.
