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AARP Rakes in Record Profits Selling Brand Royalties While Overcharging Members

(Daily Caller News Foundation) The American Association of Retired Persons (AARP) raked in massive profits in 2020, mostly from royalties on branded health insurance policies, not memberships, according to company financial documents.

AARP’s 2020 Form 990 shows that the organization reported $1.6 billion in revenue, with roughly $1 billion, or over 60%, from royalty revenue. Meanwhile, membership dues contributed under 20% of total revenue.

“The organization’s business effectively overcharges seniors who purchase insurance coverage from the organization — including Medicare supplemental policies, called Medigap insurance — to fund its own operations,” Juniper Research Group Founder and Chief Executive Chris Jacobs wrote in an August 2020 American Commitment report.

AARP is designated a 501(c)(4) nonprofit organization by the IRS, but the company has consistently made large profits due to the group’s marketing practices, according to the report.

“AARP functions less as a membership organization than as a marketing conglomerate with a liberal advocacy group on the side,” Jacobs told the Daily Caller News Foundation. “It charges so little for membership because it makes most of its money selling products to its members and taking a percentage of the cut — starting with insurance products sold by UnitedHealth.”

The largest contributor to AARP’s royalty revenue is UnitedHealth Group, Jacobs told the DCNF.

AARP has been sued four times in the last four years by its members over its royalty fee structure, according to court documents. Courts ruled in favor of AARP in three of these lawsuits.

Most recently, plaintiffs Jeremy Nichols and Leon Wilde led a class action claiming AARP and UnitedHealth made millions of dollars by illegally charging royalty fees to California senior citizens.

Specifically, the plaintiffs claimed that AARP mischaracterized fees paid by UnitedHealth as “royalty fees” to avoid taxes on income generated through the sale of insurance policies.

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