FTC sues to halt alleged deceptive health insurance scheme

The agency says products were not even insurance policies

April 29, 2026

• The FTC alleges a nationwide telemarketing scheme deceived consumers into buying fake or inadequate health insurance plans.

• A federal court has temporarily halted the operation and frozen its activities.

• Regulators say victims paid millions for coverage that often failed to deliver promised benefits.

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The Federal Trade Commission (FTC) has filed a lawsuit to stop what it describes as a widespread and deceptive health care scheme that allegedly duped consumers into purchasing inadequate insurance products while posing as legitimate providers.

According to the FTC, a U.S. District Court in Florida has already issued a temporary restraining order halting the operation, which regulators say impersonated government agencies and well-known insurance companies to sell bogus health plans nationwide.

The agency alleges that, since at least early 2023, six defendants operated a telemarketing scheme targeting people seeking comprehensive health coverage. Sales agents allegedly told consumers they were buying state-issued PPO plans with low or no deductibles and full coverage claims the FTC says were false.

Not insurance

In many cases, the products sold were not insurance at all. Instead, they consisted of limited medical discount plans or supplemental products with capped payouts, and in some instances excluded major services like hospital care.

The FTC also alleges the scheme targeted people who already had insurance, falsely warning them their existing coverage would be canceled unless they made immediate payments.

Consumers reportedly paid hundreds of dollars per month amounting to thousands annually for plans that did not provide the promised coverage. Many only discovered the limitations when attempting to use the plans, leaving some facing unexpected medical bills or delaying care altogether.

Deceptive telemarketing practices

In addition to misrepresenting the nature of the products, the complaint alleges the defendants used deceptive telemarketing practices, charged consumers without proper consent, and failed to clearly disclose terms related to recurring payments and cancellations.

The FTC claims the operation violated multiple laws, including the FTC Act, the Telemarketing Sales Rule, and the Gramm-Leach-Bliley Act. The agency is seeking financial relief for affected consumers as the case proceeds in federal court.

FTC Chairman Andrew Ferguson said the case demonstrates the agencys focus on combating practices that inflate healthcare costs and mislead consumers. Regulators indicated they will continue pursuing enforcement actions against similar schemes targeting vulnerable consumers in the health insurance market.

 

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