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Hims & Hers Stock Drops 12% After FTC Files Lawsuit Over Data Sharing, Billing
Shares of Hims & Hers Health (NYSE:HIMS) plunged on Wednesday following the announcement of a lawsuit by the U.S. Federal Trade Commission (FTC). The complaint, filed jointly with officials in Los Angeles County and Utah, alleges the telehealth platform illegally shared sensitive user data and employed deceptive business practices.
Details of the FTC Complaint
The lawsuit accuses Hims & Hers of sharing confidential health information gathered from its users with major online advertising companies, including Meta Platforms and Snap. According to a Reuters report on the filing, this data sharing allegedly occurred through tracking technologies on the company's website, despite promises of privacy made to its customers.
The complaint also outlines several allegations related to the company's business operations. Key accusations include:
- Deceptive Billing: The FTC alleges Hims & Hers charges customers for prescriptions immediately after they fill out an intake form, often before they have had an opportunity to consult with a healthcare provider.
- Difficult Cancellations: The agency also plans to argue that the company makes it unnecessarily difficult for users to cancel their subscriptions.
Market Reaction
AdInvestor response to the regulatory action was immediate, with Hims & Hers stock falling 12% in Wednesday trading. Lawsuits from federal agencies like the FTC can introduce significant legal and financial risk for a company, creating uncertainty for investors.
Allegations of mishandling sensitive health data and deceptive consumer practices can also inflict substantial reputational damage, potentially eroding the customer trust that is essential for a consumer-facing healthcare business.
Company Background
Hims & Hers operates a direct-to-consumer telehealth platform, offering virtual appointments and prescriptions for conditions such as erectile dysfunction, hair loss, mental health issues, and weight loss. The company is a significant player in the telehealth market, particularly in the growing sector for weight-loss medications, shipping products directly to customers.
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