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AARP facing barrage of legal claims in class-action lawsuit

If there is one organization viewed most widely as a friend to baby boomers and America's senior population generally, it is perhaps AARP.

That entity -- the American Association of Retired Persons -- is a nonprofit and self-described nonpartisan group that advocates for the country's senior demographic on relevant issues. AARP additionally provides an array of services ranging from various types of insurance products to discounted prices on lodging and entertainment.

For obvious reasons, AARP has always sought to project a solid and friendly image to an audience that easily numbers in the scores of millions. Reportedly, the organization has more than 40 million paying members.

That image would now seem to be tarnished a bit in the wake of a class action lawsuit filed earlier this month against AARP in a California court. The lead plaintiff is suing on behalf of all state residents 65 or older who have paid dues to AARP and a royalty linked with an AARP-sponsored health policy.

That royalty is unethical and unlawful, claims the suit, for two primary reasons.

First, it is paid by the massive insurance company UnitedHealth as a kickback to AARP for marketing, endorsing and selling the insurer's policies. The lawsuit alleges that the royalties "are actually commissions in disguise," with AARP misrepresenting them to avoid paying income taxes and having to secure an insurance license.

And, second, claims the legal filing, the "hundreds of millions of dollars" that AARP receives through linkage with insurers work to misrepresent its nonprofit status.

The filing seeks class certification and, among things, restitution paid back to insured parties and punitive damages against AARP for its alleged negligence, financial elder abuse and unlawful business practices.

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