Telehealth Company Hims & Hers Shares Slump 10% as FTC and States File Lawsuit Over Privacy and Billing

The Government Brings the Case

The FTC alleges that Hims & Hers violated regulations in several areas, and the agency is not the only plaintiff. Los Angeles County and the state of Utah joined the federal agency as plaintiffs.

The investigation started back in October 2023. That is nearly three years of looking into how the telehealth company handled customer data and billing. The result is a lawsuit that accuses Hims & Hers of charging people for prescriptions before they ever talked to a doctor, and making it hard to cancel a subscription.

Hims & Hers responded quickly. In a post on X, the company said the lawsuit is "unsupported" and that it will "vigorously defend" itself. The statement further argued that the FTC "disregards substantial evidence" and "contorts the law to try to manufacture claims."

The Core Allegations: Data, Billing, Cancellation

The privacy part is the most serious.

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During the nearly three-year investigation, Hims & Hers provided substantial evidence to regulators, according to the company, but the FTC ultimately decided to pursue legal action.

Hims & Hers had previously offered to settle without admitting wrongdoing. But the company warned that the final cost could go higher than that.

Behind the Business Model

Founded in 2017, Hims & Hers built a direct-to-consumer telehealth platform that offers prescription and over-the-counter treatments for hair loss, erectile dysfunction, skincare, and mental health. Its subscription model automatically refills medications and ships them regularly, a convenience that also makes cancellation policies critical for consumers. The company went public via a SPAC merger in 2021 and has expanded from men's health into women's health and dermatology, amassing millions of subscribers. This rapid growth has drawn regulatory attention before - the FTC investigation is not the first scrutiny of its marketing and billing practices, and the outcome of this case could reshape how digital health companies operate.

Industry Context and Investor Impact

The lawsuit represents a pivotal moment for the fast-growing telehealth industry, as regulators aim to enforce consumer protection standards in digital healthcare. Hims & Hers, which has millions of subscribers, faces potential operational changes if the court orders injunctive relief. The involvement of state and local plaintiffs signals a coordinated effort to hold telehealth companies accountable for data handling and billing practices, which could set a precedent for similar firms.

The company's stock decline reflects investor concern over both the financial penalty and reputational damage, though Hims & Hers maintains that its practices comply with the law. Telehealth has expanded rapidly since the pandemic, and Hims & Hers - which went public via a SPAC merger in 2021 - has grown from men's health into women's health and dermatology. Its subscription-based model makes cancellation policies especially consequential for consumers, and the outcome of this case could reshape industry standards.

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