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"Drug Discount Card" Promoter Settles Charges It Misled Seniors

October 30, 2006
Another company has paid the price for misleading elderly consumers about prescription drug benefits.

Massachusetts Attorney General Tom Reilly has settled charges against Peoples Benefit Services, Inc., which he accused of misleading senior citizens and other Medicare beneficiaries into falsely believing they were signing up for Medicare-approved prescription drug discount cards.

The company agreed to pay $180,000 and to stop using misleading marketing tactics. Peoples Benefit Services, based in Pennsylvania, offers prescription drug discount cards under the names "Senior Security Benefit Plan" and "Senior Rx Discount Plan," among others.

The Consent Decree resolves a lawsuit Reilly brought against Peoples Benefit Services in November 2005. The lawsuit alleged that the company used unfair and deceptive practices, including the use of government like logos, phrases and terms on television commercials and in mailings to market its "Senior Security" prescription discount card.

The lawsuit alleged that the company tried to make "Senior Security" look like one of the Medicare-approved prescription discount cards being offered at the time. The suit also alleged that Peoples began marketing its "Senior Rx" product using similar practices just as Medicare beneficiaries were about to enter the enrollment period for the new Medicare Part D prescription drug insurance program and were receiving advertisements from federally-approved insurance plans.

"Today's settlement sends a strong message to companies offering prescription discount programs to seniors -- you must be honest and accurate in your advertising, or pay the consequences," AG Reilly said. "This Consent Decree sets out a series of best practices and directs money toward helping Massachusetts consumers, including seniors."

Under the terms of the Consent Decree, Peoples is prohibited from using solicitations that may create the impression that an offer is endorsed by, approved by, sponsored by, or affiliated with any government program or agency, or any insurance product or program. Peoples also may not use phrases in its ads that suggest an urgency to an offer when in fact there is no deadline.

Peoples is also prohibited from making claims that consumers can save substantial amounts of money without disclosing the basis for those claims, or without informing consumers that if they have insurance, then the Peoples' product may or may not provide any savings at all. Peoples must also permit consumers to terminate their membership at any time.

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