International Law

Is PrePaid Legal a Scam?

Barry Minkow certainly thinks so.

He has set up this website, explaining why he thinks that PrePaid Legal is a scam.

Robert Fitzpatrick writes:

"To examine this trend of financial decline, the report focuses primarily on data of Pre-Paid's "sales" force, which is the driver of its marketing. Pre-Paid does no national advertising.

Marketing is ultimately borne by the sales people individually.

The sales force is also the core of the company's revenue. Their own purchases alone constitute about a third of all company revenue.

Each "Associate", on average, recruits only a handful (less than four) actual "customers" (called Members).

The "Members" are directly connected to the salespeople as family, friends or neighbors, as the "one-to-one" model dictates.

Therefore, as the trend of recruiting salespeople goes, so goes the company. That trend is clearly negative now. The reasons are fundamental, not cyclical, and therefore not reversible.

This report presents the mathematical and demographic basis for Pre-Paid Legal's inevitable and fully anticipated slide toward saturation and decline.

It details and explains the flawed and fraudulent business model - an endless chain recruitment scheme - that the Pre-Paid employs, which leads to this inexorable status.
This business model propagates, as all such pyramid schemes.

Read more from the Robert FitzPatrick's report on PrePaid Legal, is he right?

Full post as published by Misleading Advertising Law on May 01, 2008 (boomark / email).