Medvi, an AI-powered telehealth startup that reported $401 million in revenue last year, is facing regulatory and legal scrutiny over its affiliate marketing practices. An investigation has revealed that some affiliates used advertisements featuring AI-generated personas posing as doctors to promote the company's products, including compounded weight-loss drugs.
The company's founder, Matthew Gallagher, told Business Insider that approximately 30% of Medvi's advertising was conducted through affiliates. A review of Meta's ad library showed that several of these affiliates ran campaigns using profiles with clear indicators of AI-generated content, such as garbled text in images and Gemini watermarks on profile photos.
Fake Profiles and Regulatory Warnings
As of Monday, at least six purported doctor pages were found to be marketing Medvi's products. One profile, "Dr. Matthew Anderson MD," listed an Angolan phone number and appeared to have previously belonged to a gospel musician. Another, "Dr. Spencer Langford MD," featured older posts and contact information corresponding to a clothing store in the Republic of Congo.
One marketer, "Wade Frazer MD," removed the "MD" from the profile name after being contacted by Business Insider. The same profile photo was used by three other pages advertising Medvi. None of the pages included prominent disclosures stating the personas were AI-generated when reviewed.
Following inquiries from Business Insider, the number of active Meta ad campaigns mentioning Medvi fell from over 5,000 on Friday to roughly 2,800 by Monday.
Legal and Regulatory Challenges Mount
Medvi was one of six telehealth companies named in a formal request for an investigation sent to the U.S. Federal Trade Commission (FTC) in September by the National Consumers League and other organisations. Nancy Glick, the NCL’s director of food, nutrition, and obesity, stated that Medvi's use of terms like "trusted by experts" and "doctor-approved" on its website has confused consumers about the safety of its compounded drugs.
"What Medvi is doing violates the FTC Act," Glick told Business Insider, describing the challenge of policing online compounded drug sales as "like playing a game of whack-a-mole." The FTC has stated that advertisers must have "reasonable programs" to oversee affiliates, with health marketing requiring more supervision than lower-risk sectors.
In February, the U.S. Food and Drug Administration (FDA) sent a warning letter stating that representations on the website medvi.io were "false or misleading" for comparing its drugs to FDA-approved products like Wegovy. Gallagher claimed this website was operated by an unnamed affiliate marketer without permission and has since been taken down.
Spam Lawsuits and AI Foundation
Medvi has been sued at least three times in the past 11 months over allegations that it and its affiliates violated spam laws by sending unsolicited texts and emails. One suit was dropped and two are pending. Gallagher stated the company has a strict 'no spam' policy and investigates any claims of affiliates violating it.
The New York Times reported that Gallagher spent $20,000 on initial marketing and AI software, including ChatGPT and Claude, to build the company, chat with customers, and populate its website. While Medvi now uses some human service providers, its website disclaimer states that "certain materials" are AI-generated and it disclaims responsibility for their "accuracy, completeness, or reliability."
Broader Telehealth Industry Context
The telehealth industry has grown rapidly since 2020, fueled by the COVID-19 pandemic and demand for GLP-1 weight-loss drugs and ADHD treatments. However, other companies have faced significant legal issues. In 2024, mental health startup Cerebral paid millions to resolve a federal probe into overprescribing. Last fall, the founder of Adderall-focused company Done was found guilty of health-care fraud conspiracy.
Gallagher, in a statement on Friday, said: "In line with the FTC, we have a clear policy of providing disclosure on any actor or AI portrayal of a doctor or not using them at all. If we find an affiliate doing this we work to take these ads down." He did not respond to questions about how the company monitors its affiliates.