Hims & Hers Investor Class Action: Filed Over FTC Data Sharing

• Investors have filed a class action lawsuit against telehealth company Hims & Hers, alleging the company made misleading statements and omissions about its business practices.
• The lawsuit claims Hims & Hers failed to warn investors about deceptive practices, including sharing consumer health data with third parties like Meta and Snap, which led to an FTC lawsuit.
• Following the FTC's legal action, Hims & Hers' stock price dropped by nearly 15% on July 29, prompting the investor suit.
• The investor complaint alleges violations of the Securities Exchange Act, citing quarterly reports that claimed robust data protection policies while the company was under FTC investigation.
• Hims & Hers denies the FTC's accusations and has stated its intent to vigorously defend against the investor lawsuit.

This telehealth privacy class action underscores the critical link between a company's regulatory compliance and its obligations to investors.

A new investor class action has been filed against telehealth provider Hims & Hers, alleging the company failed to inform shareholders about deceptive business practices that ultimately led to a federal lawsuit and a significant decline in its stock value. Lead plaintiff Hemalatha Velanki contends in her 26-page complaint that Hims & Hers made material misstatements and omissions regarding its financial health and operational integrity. These alleged misrepresentations created an artificially inflated market assessment of the company, leading to overvalued securities.

The lawsuit specifically links the stock's downturn to regulatory action. The company's share price plummeted by nearly 15% on July 29, during trading hours, following the Federal Trade Commission's (FTC) announcement of its own legal action against Hims & Hers. Velanki asserts that as a direct consequence of the defendants' wrongful conduct and the subsequent market value drop, investors have incurred substantial losses and damages. The Hims & Hers investor class action seeks to recover these losses for affected shareholders.

The FTC's lawsuit, which triggered the investor action, leveled serious accusations against Hims & Hers. The regulatory body claimed the telehealth company engaged in the unauthorized sharing of consumer health information with third-party advertisers, including major platforms like Meta and Snap. This alleged FTC Hims & Hers data sharing practice is a central component of the government's case.

Beyond data privacy concerns, the FTC also accused Hims & Hers of employing deceptive advertising tactics. Specifically, the agency alleged that the company failed to adequately disclose that customers would be charged for prescriptions immediately after submitting an intake form, despite the company's claims that a medical consultation would precede any charges. Hims & Hers publicly denied the FTC's accusations in a social media statement, characterizing the enforcement action as an attempt to generate headlines at the company's expense rather than a genuine effort to protect consumers.

The investor complaint asserts that Hims & Hers violated the Securities Exchange Act by failing to provide accurate and complete information to its shareholders. The proposed class for this Hims & Hers securities fraud lawsuit includes investors who purchased the company's securities between August 4, 2025, and July 29, 2026. The starting date of this period, August 4, 2025, is highlighted because it marks the submission of a quarterly report to the Securities Exchange Commission for the period ending in June.

This particular quarterly report, and subsequent ones in November, February, and May, allegedly contained misleading assurances. Hims & Hers claimed it had "developed and maintain policies and procedures to protect" private health information, including "administrative, physical and technical safeguards." While the reports also purportedly warned of risks related to the "use, disclosure, and other processing of personally identifiable information," Velanki argues these disclosures were insufficient given the company's actual practices. Notably, a May quarterly report did include a brief acknowledgment of the FTC's concerns. The regulatory pressure intensified in October 2023 when the FTC issued a Civil Investigative Demand (CID) to Hims & Hers, requesting information on its privacy, advertising, and cancellation practices as part of a Restore Online Shoppers’ Confidence Act investigation. By April 2026, the company reported it was engaged in settlement discussions with the FTC, however, the FTC, joined by the States of California and Utah, subsequently filed a lawsuit against Hims & Hers on July 29, 2026, which is currently pending.

This telehealth privacy class action underscores the critical link between a company's regulatory compliance and its obligations to investors. The lawsuit highlights how alleged failures in data protection and advertising transparency can directly translate into significant legal and financial risks for publicly traded companies. The lead plaintiff is seeking class action certification, compensatory damages for affected investors, and has demanded a jury trial.

In response to inquiries regarding the securities lawsuit, a Hims & Hers spokesperson stated the company intends to "vigorously defend" itself against the allegations. The outcome of this case could set an important precedent for how telehealth companies manage sensitive consumer data and disclose potential regulatory risks to their shareholders, emphasizing the need for robust internal controls and transparent reporting.

This case illustrates the critical link between regulatory compliance and securities litigation risk, particularly for telehealth companies. Lawyers should advise clients that failures in data privacy, advertising, or billing practices that lead to FTC enforcement can directly trigger shareholder lawsuits alleging misleading statements and omissions, impacting stock value and increasing legal exposure.

Source: Original reporting via Courthouse News Service