The FTC just sued Hims & Hers, and if you sell anything on a recurring basis online, you should read the complaint before your next growth sprint.
On July 29, the FTC teamed up with the Los Angeles County Counsel (on behalf of the People of California) and the Utah Division of Consumer Protection to file suit against Hims & Hers Health in the Northern District of California. The company runs the telehealth subscription platforms you’ve seen advertised everywhere for hair loss, ED, anxiety, and weight loss. The government’s theory is not exotic. It’s the same set of consumer-protection rules that apply to any online seller running a subscription.
Here’s what the regulators say Hims did, and what you should take from it.
Three problems, one playbook
The complaint breaks down into three buckets: how customers got signed up, how hard it was to get out, and what happened to their data.
The signup was a bait-and-switch, according to the government. Hims advertised a “free consult” where you’d “connect with a vetted provider” to see if treatment was “right for you.” At the end of the intake questionnaire, the checkout button said “Pay $0 today,” reassured customers they “won’t be charged until prescribed,” and told them in bold, “You will only be charged if prescribed.” The reality, the FTC alleges, is that most customers never got a consultation at all. A provider reviewed the form, wrote a prescription, and Hims charged the card and enrolled the person in a subscription before they even knew what had been prescribed. The one honest disclosure (“you are purchasing an automatically-renewing subscription”) sat in small, low-contrast font underneath the button.
Getting out was engineered to be hard. Hims allegedly charged the first refill ten days before the cadence customers picked, and required them to cancel two full days before that to avoid the charge, so a “monthly” plan effectively billed on day 20 with a day-18 deadline nobody was told about. When customers tried to cancel online, the word “cancel” didn’t appear on the subscription page. They had to guess that “Add/remove items from order” was the path, uncheck everything, and then click through three to ten survey screens and retention offers before the cancellation took. Tellingly, the complaint alleges Hims built simple one-click cancel buttons for California and Colorado, then rolled out the older, friction-heavy flow everywhere else.
The privacy promises didn’t hold. Hims told customers the process was “100% online, private, and secure,” that their records were “only accessed by the medical providers managing your care,” and had influencers call it “discreet. Meanwhile, the FTC says, Hims shared sensitive health information with Meta and Snap through customer-list uploads and pixel tracking, and had pixels from more than a dozen other ad platforms, including Google, TikTok, Pinterest, Reddit, Microsoft, and X, firing on its site. This is health data about erectile dysfunction, mental health, and the like, allegedly going out to ad networks while the marketing promised discretion.
The legal hooks
The FTC is leaning on Section 5 of the FTC Act (deception) and ROSCA, the Restore Online Shoppers’ Confidence Act, which governs online subscriptions with a “negative option” feature. ROSCA’s requirements are worth understanding: disclose all material terms clearly and conspicuously before you collect billing information, get the customer’s express informed consent before charging, and give them a simple way to stop the charges. California piled on with its False Advertising Law, Unfair Competition Law, and the Automatic Renewal Law; Utah added its Consumer Sales Practices Act.
One more detail regulators love to highlight: the complaint says Hims knew. It points to direct complaints, BBB and Trustpilot reviews, a Civil Investigative Demand back in October 2023, and the company’s own SEC filings flagging consumer-protection risk, and then argues Hims only cleaned things up after the FTC came knocking. Awareness plus inaction is often turns a compliance gap into an enforcement priority.
What to actually do with this
You don’t have to sell prescriptions to be in the FTC’s crosshairs here. If you run a subscription, a free trial that converts, or any auto-renewing offer, the same rules apply. A few things I’d put on the list:
- Fix your checkout disclosures. Every material term, price, billing timing, renewal, and cancellation deadline, needs to be clear and conspicuous and appear before the customer hands over payment info. Not in gray 10-point type where it’s hard to read or could be missed. And ensure you are obtaining consent to to those subscription terms in a way that complies with ROSCA’s requirements and state laws like California’s ARL (which gets more specific than ROSCA does and is frequently the subject of consumer class litigation).
- Kill the “free” claim if it isn’t. “Free consult,” “free trial,” “$0 today” are all fine only if the customer can actually walk away without paying. If the free thing funnels straight into a charge they can’t dodge, that’s a deception claim waiting to happen.
- Make canceling as easy as signing up. If a customer can subscribe in two clicks, cancellation shouldn’t take a scavenger hunt and a survey gauntlet. Put the word “cancel” where people look. Retention offers are subject to limitations under state laws like California’s ARL.
- Audit your pixels and data sharing. Walk your own site with the developer tools open and see what’s firing. If Meta, TikTok, or anyone else is receiving data tied to sensitive categories (health, sexual, financial), and your privacy policy or ads say otherwise, you have a problem.
- Remember your ads are promises. “Private,” “secure,” “discreet” are representations you have to back up. And the influencer content you review and approve is your speech, legally, so the same standard applies to it.
- Don’t sit on complaints. If customers, chargebacks, or your own reviews are telling you people feel tricked, pay attention. In an enforcement action or consumer case, they often become Exhibit A that you knew and kept going.
The through-line is simple. Regulators are focused on the gap between what your marketing implies and what your billing and data practices actually do. Close that gap now, on your own terms, rather than later on theirs.
This post is general information about a pending case and isn’t legal advice. The allegations against Hims & Hers are unproven. If you’re wondering whether your own flows hold up, that’s worth a real conversation.
Have you ever seen brands offering big discount sales that seem to go on forever? Or when one supposed sale ends, another starts right after it? Have you ever felt like that should be illegal?
Turns out that it is illegal, and it’s something that brands, big and small, are being sued for almost every single day, with big consequences.
Take the fashion brand Boohoo for example. They were sued by consumers who alleged that the so-called “original prices” that the brand marked down were fake, and in 2023, Boohoo agreed to a settlement worth nearly 200 million dollars.
Last year, Hot Topic was sued for the same thing, and they quickly settled the case for $12.5 million. Same story with RugsUSA—sued for fake discounts, settled last year for $14 million.
So what’s going on here? Why have hundreds of brands gotten in legal trouble for this? What makes an advertised discount legitimate versus illegal?
In this video, I’m going to help explain the federal and state laws that apply to advertised discounts, show you some screenshots from cases that resulted in multi-million dollar settlements, and give you some tips to help you stay on the right side of the law.
I should mention that I am a lawyer who focuses on advertising and ecommerce issues, but I’m not YOUR lawyer, and so what I’m going to share is information about the law and not legal advice. If you need advice about your own situation, you should talk to a lawyer in your jurisdiction.
SECTION 1: UNDERSTANDING REFERENCE PRICING
First, let’s clarify what we’re talking about. Reference pricing is when you show a higher “original” or “regular” price, often with a strikethrough, next to a lower “sale” price. It looks something like this:
$100 $75.
This is a powerful marketing tactic because it makes customers feel like they’re getting a deal, especially if they feel like they need to act quickly to take advantage of it. But if something is always on sale, it’s never really on sale, and that’s deceptive. And that’s the premise behind the laws that govern former price comparisons.
The Federal Trade Commission sets out its reference pricing rules in a document called the Guides Against Deceptive Pricing.
The FTC rule says an advertised former price needs to be “the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time.”
The FTC doesn’t specifically define what constitutes a “reasonably substantial period of time,” which creates some ambiguity. However, the intent is clear – you can’t just raise a price temporarily so you can then “discount” it and claim you’re running a sale.
States like California get more specific.
California has some of the strictest laws in the nation regarding reference pricing, and many major lawsuits have been filed under these regulations.
Under California’s Business and Professions Code § 17501, an advertised former price must have been the prevailing market price within the 90 days immediately preceding the advertisement. If it wasn’t, you must clearly disclose the last date when the product was sold at that price.
And California’s Consumer Legal Remedies act prohibits misrepresenting the reasons for, existence of, or amounts of price reductions.
Let me give you some examples to make this clearer:
Compliant Scenario: A brand sells its jacket for $500 from January through March. For a week in April, they advertise it as “Now $400, was $500.” This is compliant, because the jacket was actually sold for $500 for the past 90 days.
Non-Compliant Scenario: A brand introduces a new shirt and immediately advertises it as being marked down to $150 from $200. This would violate the law because the shirt was never offered for sale at $200.
Another Violation: A brand always runs a sale on a gummy supplement. For the New Year’s sale, it’s 20% off. Then for Valentine’s Day, it’s 30% off. Right when that ends, the Spring Sale is 25% off. That rolls into Easter, then Father’s Day, and so on. If there is always some advertised discount, then the original price hasn’t been the prevailing market price for the last 90 days.
SECTION 2: CASE EXAMPLES
Now let’s look at some major cases that resulted in significant settlements. These examples show just how seriously courts take these violations.
In 2023, online fashion retailer Boohoo and its subsidiaries agreed to a massive $197 million class action settlement over deceptive pricing practices.
The plaintiffs alleged that Boohoo advertised almost all of its products with inflated, “fake” original prices that were rarely, if ever, the actual selling prices. Instead, these reference prices were used to create the false impression that consumers were receiving deep discounts.
As part of the settlement, Boohoo the other brands agreed to add a disclosure on their product pages stating that their original prices are not former prices but instead reflect their opinion of the product’s value. The disclosure reads:
“Our percentage off promotions, discounts, or sale markdowns are customarily based on our own opinion of the value of this product, which is not intended to reflect a former price at which this product has sold in the recent past.”
This can be a compliant way to avoid having the former price laws apply, if the brand clearly and conspicuously explains that strikethroughs are not meant to convey that a savings refers to a former price.
Hot Topic recently settled a class action lawsuit for California and Oregon residents who purchased from their website. The lawsuit alleged that Hot Topic deceptively advertised various discounts on their products.
Basically the same situation as with Boohoo – Hot Topic allegedly advertised fake former prices, consumers sued, and the business agreed to pay $12.5 million to settle.
RugsUSA agreed to a $14.2 million settlement fund to resolve claims that they engaged in deceptive pricing practices on their website.
Like the others, this lawsuit alleged that RugsUSA deceptively advertised discounts, creating the false impression that consumers were getting special deals when they weren’t.
And dozens more like these are filed every week.
You might be thinking, what’s the real harm here? If I pay $40 for a shirt that is advertised as being on sale for $40, haven’t I received exactly what I paid for? That’s the argument that many of these defendants try to make.
Here’s how I think about it. Let’s say I’m in the market for a new hoodie. I don’t want to spend more than $100, so that’s the limit I set when I’m shopping around online. If I saw one for $140, I’m not going to consider it. But if I come across an ad for a sweater that’s normally $400, and the brand tells me that I can get it for $140 today only, I might spend more than I wanted to, thinking I’m taking advantage of a limited-time bargain.
If it turns out the sale was fake, I’ve spent $40 more than I would have if I knew the truth. And if there are a million other customers who bought items from that brand thinking they were getting bargains, the value of the case adds up pretty quickly.
You might also be wondering how these cases get started. What kind of customer would be so upset over a 10- or 20-dollar discount that they want to go to make a federal case out of it? Can’t they just ask for a refund?
Well, a customer is not required to ask for a refund, or even send you a demand letter, before suing. And trying to “moot” a class action by offering the named plaintiff a refund is not a strategy that works.
All it takes to initiate a class action lawsuit is for one customer who purchased your product to connect with a plaintiffs’ lawyer interested in pursuing the case, and it’s often the lawyers who find the clients and not the other way around. If you’ve ever been served an ad on Instagram telling you that you may be entitled to compensation if you purchased from a specific brand, that is a law firm who has identified a violation and is trying to find a plaintiff for the case.
SECTION 3: COMPLIANCE TIPS FOR BUSINESSES
Now that we understand the regulations and have seen the consequences of non-compliance, let’s talk about practical steps your business can take to stay compliant.
First, you want to keep detailed pricing records. So you should maintain comprehensive logs of your product prices, including the dates when each price was in effect, sales volumes at each price point, and screenshots of your website showing the pricing history. This documentation is crucial if you ever need to substantiate your advertised former prices.
Second, understand and comply with the 90-day rule.
To meet California’s strict requirements (which is a good standard to follow regardless of where you operate), you should ensure that any reference price was actually in effect for the majority of the past 3 months. A good rule of thumb is to take any given day that you’re running a sale and ask, were we offering the product at the original price for at least 46 of the last 90 days? If not, you may need to adjust how you advertise the sale today. And if you’re using an older reference price, clearly disclose when that price was last in effect. For example, you could say something like “was $200 until January 1, 2025,” to be transparent.
Third, Avoid Perpetual Sales and Countdown Timers that reset
One big red flag is the “perpetual sale” where items are always discounted. To avoid this, establish a regular pricing cycle with defined sale periods, and return products to their regular prices between promotions. And if you are using a countdown timer, make sure that the sale actually ends when the timer runs out. Many of these lawsuits also include screenshots of timers that supposedly end at a certain time but reappear as soon as they expire.
Finally, be careful with bundle offers. Several of the more recent cases have targeted brands that offer discounts when a customer buys multiple items in one bundle. Brands often will advertise the savings attributable to the bundle by using a strikethrough price. But they need to make clear that the comparison is between the bundle and price of buying the included items individually. You can achieve that by saying something like “bundle and save.” But where brands only use a strikethrough, consumers can argue that they believed the BUNDLE ITSELF is being discounted from a former price it was previously sold for.
It’s a subtle distinction, but that extra clarity can be the difference between a compliant offer and a class action lawsuit.
CONCLUSION
As we’ve seen, deceptive reference pricing can lead to massive legal headaches and settlements in the millions of dollars. The regulations may seem complex, but the underlying principle is simple: be honest with your customers about your pricing.
Remember these key points:
- Reference prices must be real prices at which you’ve actually sold products for a significant amount of time
- California’s 90-day rule is a good standard to follow regardless of where you operate
- Keep detailed records of your pricing history
- Avoid perpetual sales where items are always discounted
- When in doubt, disclose more information rather than less
By following these guidelines, you can use reference pricing as an effective marketing tool in a more compliant way.
White nationalist Steve King was found liable for copyright infringement for his use of the “Success Kid” meme template in his advertising.
King’s fair use argument failed.
Let’s look at why.
Griner registered the photo with the Copyright Office in 2012 and then licensed the image to businesses like Microsoft, Coca-Cola, and others:
Without permission, King used a version of the meme soliciting donations for his campaign.
Griner sued King and the King for Congress Committee for infringement, the case went to a jury trial, and the Committee was found liable for infringement.
The Committee appealed, arguing that it made fair use of the Success Kid template, and lost.
Here’s how the 8th Circuit looked at the fair use argument:
Recall the four statutory fair use factors, which the court applied (paraphrasing here):
1) The purpose and character of the use, including whether the use is commercial;
2) The nature of the copyrighted work;
3) The amount copied;
4) The use’s effect on the market/value of the work.
For the first factor, the court determined “it is undisputed that the Committee’s use was purely commercial …. The Committee sought to exploit the copyrighted material, for financial gain, without paying the customary price.”
The Committee argued that disseminating a meme on social media is something that happens millions of times a day.
Not a good argument:
The Committee conceded that it had no argument as to the second factor (nature of the work), so the court skipped it.
The third factor cut against the Committee:
The fourth factor (impact on the market for the original work) favored neither party.
While Griner licensed the template to many big brands, “a reasonable jury could conclude that association with King would drive away some potential licensees.”
The takeaway: Using memes for noncommercial purposes is probably fair use in most circumstances.
But using memes in ads probably is not.
Brands using memes in ads should think carefully about the risks.
Read the opinion: https://media.ca8.uscourts.gov/opndir/24/06/223623P.pdf