Medvi, the AI-powered telehealth company, is fueled by ads from doctors who don't appear to exist

The telehealth sector faces scrutiny as Medvi, an AI-driven startup, experiences explosive growth. With only two employees, the company reported an astonishing $401 million in revenue last year, generating a profit of $65 million, and is on track to reach $1.8 billion in sales this year, as highlighted in a recent New York Times profile. A significant contributor to Medvi's success appears to be its reliance on affiliate marketers. Founder Matthew Gallagher indicated that approximately 30% of the company's advertising budget is allocated to these affiliates. However, a review of Meta's ad library reveals troubling practices, as some affiliates have been found to use AI-generated content, including profiles of individuals purportedly serving as doctors. Among these profiles, several have been linked to advertisements promoting Medvi's weight-loss products and male enhancement drugs. For instance, one profile identified as "Dr. Matthew Anderson MD" features an Angolan phone number and seems to have previously belonged to a gospel musician. Another, labeled "Dr. Spencer Langford MD," lists outdated contact information for a clothing store in the Republic of Congo. After inquiries from Business Insider, one marketer adjusted their profile name by dropping the "MD" designation, although the same image was used across multiple accounts. As of the last update, over 5,000 active ad campaigns were promoting Medvi. However, after being alerted to the questionable profiles, the number of ads plummeted to approximately 2,800 within just a few days. Gallagher asserted that Medvi adheres to Federal Trade Commission (FTC) guidelines, stating, "If we find an affiliate doing this, we work to take these ads down." Yet, a review of the profiles found no clear disclosures regarding AI use or actor portrayals. Medvi is among six telehealth companies currently under investigation by the FTC, following concerns raised by the National Consumers League regarding misleading marketing claims. Nancy Glick, the NCL's director, emphasized that terms like "trusted by experts" and "doctor-approved" mislead consumers about the safety of the compounded drugs Medvi offers. Glick criticized the company's practices as violations of the FTC Act, likening the situation to a game of "whack-a-mole" for regulators. The FDA has also raised red flags, sending a letter to Medvi in February about misleading representations on its website, which inaccurately compared its products to FDA-approved medications. Gallagher contended that the website in question was operated by an affiliate without his permission, which resulted in its removal. Legal challenges have emerged for Medvi, with multiple lawsuits alleging violations of spam laws related to unsolicited communications. Gallagher defended the company’s practices, claiming a strict "no spam" policy and a commitment to only contacting opted-in individuals. Despite the controversies, Gallagher disclosed that he invested heavily in AI technologies, including ChatGPT, Claude, and Grok, to help establish and promote Medvi. The telehealth industry has burgeoned since 2020, largely due to the COVID-19 pandemic and rising demand for certain medications. However, this growth has not been without pitfalls, as other companies face legal and ethical challenges in their marketing practices. With the FTC and FDA keeping a watchful eye, the future of Medvi and similar startups remains uncertain, as the lines between technology, marketing, and healthcare continue to blur.