Fine Amount: $100,000,000
Primary Violation: Unfair and deceptive acts or practices
Relevant Period: Jan-17 > May-24
Overview
The Federal Trade Commission (FTC) filed a complaint against Assurance IQ, LLC, resulting in a stipulated order for a permanent injunction and a $100 million monetary judgment.
Assurance, a Washington-based company marketing health-related products, was accused of misleading consumers through deceptive online representations and telemarketing practices.
The core issues involved misrepresenting short-term medical plans, limited benefit indemnity plans, and supplemental products as comprehensive health insurance, failing to disclose limitations, and charging for unauthorised products, leading to substantial consumer harm.
Assurance IQ, LLC, founded in 2016 and operating under names like Assurance and National Family Assurance Corporation, marketed and sold health-related products including short-term medical (STM) plans, limited benefit indemnity (LBI) plans, and supplemental products such as telemedicine and discount plans. These products were primarily distributed on behalf of Benefytt Technologies and sold via websites like healthinsurance.net and outbound telemarketing calls.
The FTC alleged that Assurance deceived consumers by implying these plans were equivalent to comprehensive health insurance under the Affordable Care Act (ACA), which requires coverage for essential benefits without exclusions for pre-existing conditions.
Instead, Assurance's plans had significant restrictions, monetary caps, and exclusions. Telemarketers used mandatory scripts that misrepresented plan features, such as unlimited coverage after deductibles and access to provider networks with substantial discounts. Assurance also bundled supplemental products without clear disclosure of separate costs, leading to unauthorised charges.
Despite consumer complaints and awareness of similar issues with partners, Assurance continued these practices until announcing a business wind-down in May 2024.
Assurance's website claimed to "specialise in Obamacare" and work with "hundreds of different insurance carriers", displaying logos of major providers like Anthem Blue Cross Blue Shield. In reality, Assurance did not sell ACA-compliant plans until 2019 and offered limited products from few carriers, misleading consumers seeking comprehensive insurance.
This occurred from at least January 2017 to February 2018, leading to consumers believing they purchased equivalent coverage, only to face exclusions for pre-existing conditions and essential benefits.
Telemarketers scripted to promise 35-70% discounts on medical bills via PPO networks, e.g., reducing a $200 doctor's visit to $25 out-of-pocket after repricing and benefits. However, repricing was not included in core plans but in separate supplemental products, with actual discounts varying by state and provider, often unsubstantiated.
Scripts used nationwide ignored factors like location, resulting in consumers incurring higher costs; for instance, a promised 50% reduction on $200 to $100, then $75 benefit, leaving $25, but actual savings were inconsistent and lower.
Assurance telemarketers blurred lines between STM/LBI plans and supplemental products, representing benefits like telemedicine as included at no extra cost. Consumers were charged separate monthly fees (e.g., hundreds of dollars recurring) without breakdown, leading to unauthorised enrollments.
Internal discussions noted disclosing separate costs would prompt removals; complaints showed consumers unaware of optional nature, with charges continuing post-cancellation of core plans.
Scripts claimed STM plans covered all bills after a $2,000 out-of-pocket maximum up to $1 million. In fact, plans imposed caps on services like hospitalizations and surgeries, leaving consumers with unexpected expenses exceeding stated limits.
For example, a script stated "once those are met, then Independence American Insurance Company will cover the rest," but monetary limits on emergency care (e.g., per incident caps) rendered this false, exposing consumers to substantial out-of-pocket costs.
"The Complaint charges that Assurance participated in unfair and deceptive acts or practices in violation of Section 5 of the FTC Act... and the FTC’s Telemarketing Sales Rule... in connection with the advertising, marketing, telemarketing, promoting, offering for sale, or sale of association memberships and health-related products." (From the Stipulated Order)
"Assurance has misrepresented that the STM and LBI plans included preferred provider organization (“PPO”) networks that would substantially discount consumers’ medical bills." (From the Complaint)
"Assurance has charged consumers for products or services for which the consumers have not provided express informed consent." (From the Complaint)