Telemarketing Health Insurance Scam

A case of unscrupulous telemarketing scam artistry has resulted in a heavy settlement with the Federal Trade Commission. The principal defendants in the FTC’s case, Roy and Judy Hamilton, tricked consumers into buying pricey “health insurance,” and instead sold them membership into the Independent Association of Businesses (IAB). The couple preyed on vulnerable people desperate for health insurance—the uninsured, unemployed, and those with pre-existing medical conditions.The FTC brought fraud charges against the Hamiltons and companies, Health Service Providers, Inc., Magnolia Health Management Corporation, Magnolia Technologies Corporation, and Fav Marketing Inc. in September of 2012. The telemarketing scam worked like this: the defendants called anyone who had submitted contact information to websites claiming to offer quotes for traditional health insurance or equivalent coverage, at costs including an initial fee ($50 to several hundred dollars) and a monthly fee ranging from $40 to $1,000. Instead of comprehensive health insurance, people eventually found they’d been tricked into purchasing an IAB membership, offering supposed discounts on golf, travel, and some limited health related services and insured benefits.As part of the FTC settlement, the Hamiltons are permanently banned from selling healthcare-related products; forbidden from misrepresenting material facts about any goods or services, selling or otherwise benefiting from consumers’ personal information; and from breaking the FTC’s Telemarketing Sales Rule, which includes calling people on the Do Not Call Registry. The FTC imposed an $11.8 million judgment against the couple, which was suspended after they surrendered their assets. Litigation is ongoing against the other defendants in this scam: IAB Marketing Associates LP, Independent Association of Businesses, HealthCorp International Inc., JW Marketing Designs LLC, International Marketing Agencies, LP, International Marketing Management LLC, Wood LLC, James C. Wood, James J. Wood, Michael J. Wood, and Gary D. Wood.