Hims & Hers shares slide 8% as fraud probes mount

Hims & Hers shares fell 7.99 percent to $31.08 on Aug. 24 as four law firms opened fraud probes after FTC and Visa scrutiny.

The FTC's July 29 complaint accuses Hims of "deceptive and unlawful privacy practices," including sharing sensitive details about patients' health with Snap and Facebook parent Meta Platforms. Shares dropped $4.32, or 14.73 percent, to close at $25.00 that day, the steepest single-day decline for the telehealth company this year.

On Aug. 21, Bloomberg reported Visa placed Hims in its Acquirer Monitoring Program after a surge of customer credit card disputes in July tied to the company's weight-loss subscription business. Each dispute carries an $8 surcharge, producing a nearly $75,000 bill due in September, according to internal documents reviewed by Bloomberg. Shares fell as much as $3.22, or 9.53 percent, in intraday trading on Aug. 24 before closing down $2.70 at $31.08.

Law Offices of Howard G. Smith, Glancy Prongay Wolke & Rotter, Kessler Topaz Meltzer & Check, and Law Offices of Frank R. Cruz are investigating potential violations of federal securities laws on behalf of investors who purchased Hims securities and experienced losses. The probes could result in legal costs, settlements, and further regulatory scrutiny for the company, whose stock has now fallen on two separate regulatory disclosures within a month.

The investigations put pressure on Hims' billing and privacy practices, which could affect subscriber retention and future growth in its weight-loss and telehealth businesses. The company's enrollment in Visa's Acquirer Monitoring Program suggests elevated chargeback rates that could lead to higher processing fees or restrictions on card acceptance, a material risk for a subscription-based business model.

The FTC lawsuit and Visa monitoring program together represent a dual regulatory threat to Hims' core operations. The company's telehealth platform has grown rapidly through direct-to-consumer marketing of weight-loss treatments, making it particularly exposed to scrutiny of its data-sharing and billing practices.

Investors will watch for formal securities class action filings and the company's response to the FTC lawsuit in the coming weeks. The outcome of these probes could determine whether Hims faces financial penalties, changes to its data-sharing practices, or additional shareholder litigation.

This article is for informational purposes only and does not constitute investment advice.