Washington Times columnist cheated by Pre-Paid Legal
Filed under: Fraud
In the age of the internet, companies have to constantly worry about angry consumers telling the world their troubles. I'm thrilled that the internet has given consumers a voice. Previously, companies could do as they wished with their customers, and the chances of anyone finding out were slim. Now that's not the case as blogging is a tool available to anyone with access to a computer.
Companies need to be more careful in how they deal with customers, especially if their customers have a very large platform from which to shout about their experiences. Imagine what happens when a Washington Times columnist gets cheated by multi-level marketing company Pre-Paid Legal....
Kate Tsubata had a Pre-Paid Legal membership at one time, but quickly canceled it when she and her husband realized it didn't cover any of the things they needed and believed were covered. 20 months after canceling their membership, they realized that they had been charged $12.95 a month for a Pre-Paid Legal service they didn't sign up for.
They didn't realize that the company was taking money out of their bank account each month for an "identity theft protection" service that they never wanted and never authorized. And when Kate called the company to ask them to refund the money that was fraudulently taken out of their bank account, the company refused.
After some arguing, they finally offered to refund half of the money they had taken. Feeling totally cheated and entitled to a full refund of the money that was stolen, Kate declined their offer and instead informed them she'd be writing about the company in her column for the Washington Times.
Put aside for a moment your personal opinion on whether or not Pre-Paid Legal is a scam. Yes, plenty of people (me included) believe the company is nothing more than a recruiting scheme, made to appear legitimate with some flimsy "legal plan" that doesn't offer a whole lot to the members.
But this case is far more cut and dry than the pyramid scheme issue. It's an issue of right and wrong. Kate and her husband never signed up for the identity protection service, and never authorized money to be taken out of their bank account for it. How can employees of Pre-Paid Legal think they could give her anything less than a 100% refund of the money they took without authorization?
A situation like this is never pretty. Unfortunately for Pre-Paid Legal, when bloggers get hold of situations like this, it can create a storm of negative publicity. It will probably cost the company far more in the long run, as they will lose credibility with the people who might have otherwise become customers someday.
Oh well.... If that's worth offering only half of Kate's money back, then so be it. Personally, I think companies ought to be a little more careful wtih how they treat customers.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
Companies need to be more careful in how they deal with customers, especially if their customers have a very large platform from which to shout about their experiences. Imagine what happens when a Washington Times columnist gets cheated by multi-level marketing company Pre-Paid Legal....
Kate Tsubata had a Pre-Paid Legal membership at one time, but quickly canceled it when she and her husband realized it didn't cover any of the things they needed and believed were covered. 20 months after canceling their membership, they realized that they had been charged $12.95 a month for a Pre-Paid Legal service they didn't sign up for.
They didn't realize that the company was taking money out of their bank account each month for an "identity theft protection" service that they never wanted and never authorized. And when Kate called the company to ask them to refund the money that was fraudulently taken out of their bank account, the company refused.
After some arguing, they finally offered to refund half of the money they had taken. Feeling totally cheated and entitled to a full refund of the money that was stolen, Kate declined their offer and instead informed them she'd be writing about the company in her column for the Washington Times.
Put aside for a moment your personal opinion on whether or not Pre-Paid Legal is a scam. Yes, plenty of people (me included) believe the company is nothing more than a recruiting scheme, made to appear legitimate with some flimsy "legal plan" that doesn't offer a whole lot to the members.
But this case is far more cut and dry than the pyramid scheme issue. It's an issue of right and wrong. Kate and her husband never signed up for the identity protection service, and never authorized money to be taken out of their bank account for it. How can employees of Pre-Paid Legal think they could give her anything less than a 100% refund of the money they took without authorization?
A situation like this is never pretty. Unfortunately for Pre-Paid Legal, when bloggers get hold of situations like this, it can create a storm of negative publicity. It will probably cost the company far more in the long run, as they will lose credibility with the people who might have otherwise become customers someday.
Oh well.... If that's worth offering only half of Kate's money back, then so be it. Personally, I think companies ought to be a little more careful wtih how they treat customers.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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Reader Comments (Page 1 of 2)
8-12-2008 @ 4:49PM
maytropic4 said...
I also was told that there was a one time fee for the ID Protection, but I later found only because I had to change bank accounts that I was being charged monthly for the service. I contacted the person who I signed up with about it and he stated that he did tell me it was a monthly fee...which was totally false!
Reply
8-14-2008 @ 12:51AM
Scott said...
I use Pre-Paid Legal and love it. They do EXACTLY what they say they will do in their contract and more. I doubt highly the situation as you write about is accurate. If you did happen to be mis-led (hard to believe such an important and smart person like yourself could be swindeld) it wasn't from the company itself, it would of been the fault of the independent associate that sold you the plan, just as a health insurance agent or financial advisor that promises what they can't and shouldn't offer. Way to go slandering the entire company for the act of one independent agent or your lack of understanding of what you were purchasing. You really showed them!
Your gripe should be with associate or their E&O carrier, not the company itlself.
To maytropic4: in no way whatsoever would an ethical associate/agent ever tell you the ID Theft Shield was a one time fee, either you misheard them or the indpendent associate was mis-leading you. As with most insurance policies and services, misunderstanding and communication problems can arise if you fully don't understand what you are buying.
Reply
8-14-2008 @ 8:46AM
Tracy Coenen said...
Scott - It's humorous to see how quickly you dismiss this woman's story as untrue, and then turn around and claim that no Pre-Paid Legal associate would ever lie!
Unfortunately, I've heard far too many stories from former Pre-Paid Legal customers about the lies they were told before they paid for a plan or signed up to become an agent. It seems that misrepresentations are rampant, both with corporate and the agents.
I hope more consumers stand up for their rights!
8-14-2008 @ 1:18PM
Scott said...
Tracy,
Can you read? Seriously. I said no ETHICAL associate or agent would lie. That's why there are oversight orgianizations such as the Dept. of Insurance. Do you know many current and former health insurance customers think they are cheated when it comes down to a simple mis-understanding of the policy they bought, sometimes their fault, sometimes the agents fault.
I dismissed the fact that her plan didn't work and it was the company that lied because PPL follows their contract. THis is a NYSE company with 3 former attorney generals on their advisory board and two other former attorney generals as their provider law firms. They are regulated by insurance departments, the SEC and other gov't oversight agencies. I have represented over 30 insurance companies in my 18 years as an agent and none are more ethical and honest then PPL.
Again, their plans and services do EXACTLY what they say they'll do. In almost every state you have a right to look period. Regardless of what ANY agent or asscoiate says for any type of insurance or plan, once you get the policy, you have a right ro review it (and I say an obligation) and verify it is what you want. Did you ever read your benefit booklet for health insurance? I mean, before you had a claim? If an agent or associate lies, I want them removed, I don't defend them and I don't discount it happens, I've seen it happen.
But to slander an entire company as you did with the power of your column and pen for a second hand story that I'm not sure how much effort you put into investigating makes me wonder about alertnative motives?
If you want to do a story about consumers standing up for their rights, then may I suggest looking into Healthmarkets (aka Mega Health & Life, NASE, etc). A company (along with a majority of their agents) that actually do lie and mis-represent.
Reply
8-14-2008 @ 4:19PM
Deborah said...
I did a little research on your story, and I grant you that she may have been misled, BUT why in this day and age of Identity theft did this "journalist" not balance her checkbook, or look at the statement from the credit card company and notice her monthly charges?
I have PPL it is clearly marked EVERY month when my direct payment is sent.
More than likely at this point you think I am an "associate" I'm not, but in my dealing with the prevention of ID theft they are the best ones around for helping prevent and detect problems.
I know that not all associates are "good" "ethical" but the company as a whole is, I think that this "reporter" if she had done her due diligence would have found that out, she should report the associate for mis-representing the company, as well as she really should balance her checkbook and really LOOK at her statements.
Reply
8-14-2008 @ 8:53PM
Tracy Coenen said...
Anyone who thinks Pre-Paid Legal is an "ethical" company ought to check out this website: www.prepaidillegal.com
Reply
8-30-2008 @ 5:57PM
Chris Lima said...
What are you talking about, and what do you really know about Prepaid Legal? They been around for many years and have help thousands of people stand up for their consumer rights. What nonsense your article is. To say that this company offers a flimsy legal plan that doesn't offer a whole lot to it's members, is plain ignorance and for lack of a better word BS. Actually, it's the exact opposite! Prepaid Legal offers a ton of service and legal coverage for just pennies a day, and the law firms that represent them are amongst the top rated in the US and Canada. Can you tell me otherwise? No, because obviously you never used their services. What they offer for a messly $26/month is increadible and covers most everything a normal person would need in terms of legal services and protection. Tracy's your article stuns me in the sense that you would write an article like this and not even know what services PPL covers in their membership.
Let me ask you this Tracy, how much does it cost you per hour to talk to your attorney? I'll let you in on a secret (beacuse you're in the dark here). I'll tell you how much it cost me to consult with any one of the 35 attorney's at my law firm. It costs me $26 a month! Yes, for unlimited consultation. I will guess that your 1 attorney costs you anywhere from $200 to 300/hour. Am I wrong? No.
I have a big mouth (as you can see) and it occasionally get's me in trouble. It's even got me sued.Thank GOD I have Prepaid Legal! Part of there flimsy legal plan (that doesn't offer a whole lot) covers you against lawsuits. I'm proud of my TEAM of attoney's that were able to dismiss the case against me without it even making it to court. Yeah, the the company and their services are junk!
My family, friends and I have had Prepaid Legal for more than 10 years now. I alone use it atleast 1 a month to protect my consumer rights. One use of thier service usually pays for the entire year that it cost me to carry. For those who would prefer to do their research (you would think a jornalist would do theirs, right?), look them up on the New York Stock Exchange. For you Tracy, I would challenge you to do the minimal research and post here what their services do cover, instead of the crock you are writing. Right now, you're not doing what a irresponsible jornalist does. You are being biased, and you're misinformed (that's plain lazyness and disregard for your profession). It's a shame that the W.P. would run such a peice. Both of you should be ashamed. If I were Pre-Paid Legal I would slap a lawsuit on both of you and give you a real feel for the quality and limitations of the services. Thats what your lame ignorant opinon deserves.
THANKS PREPAID LEGAL FOR YOUR YEARS OF OUTSTANDING SERVICES AND PROTECTION. THIS COMES FROM ME, MY FAMILY AND MY FRIENDS.
If anyone wants proof of the results a person like me has had with their service, I'll be glad to share them with you. I have tens of letters addressing just about every everday life event. I can't tell you how many times I have great results with them. In my opinion, PrePaid Legal offers top of the notch services that everyday people like you and me need, for only pennies a day. Thay have given me the ability to fight for my rights even if it is against the big guys. I encourage you not to believe me nor the crock that Tracy wrote. I encourage you to do do some research and find out for yourself. Then change newspapers. CHEERS!
9-30-2008 @ 9:36AM
LGR said...
Dear Tracy,
As someone who investigates fraud, I am assuming that you take into consideration that truth is often in the eye of the beholder (and from that person's vested interest). The website you mention as a resource for the abuses of Pre-Paid Legal is a site put up by a lawyer who created a class action suite against PPL and while he lost (as can happen whether a company is right or wrong) it doesn't change the fact that he has a vested interest in spreading half-truths and falsehoods against the company against which he launched a suite.
I have been a member of PPL for years and have had nothing but great service (actually in someways unbelievable service). But I read my contract (which every member receives and upon reading would understand what is covered and how). Anyone taking the word of any sales person is at best lazy and at worst ignorant. The contract spells out exactly what you have purchased and what it will do. If you have any questions, you simply call Customer Service and ask and if you feel that you were misinformed, you cancel the service. The fact that the writer did not realize there was a reoccurring charge for the service is certainly at least half to blame so the offer she received from the company seems fair. Instead of spreading false rumors, inaccuracies and falsehoods, someone needs to take personal responsibility for the financial life. In a resent investigation into the company and its service by an investment company, it was discovered that even when people drop their PPL service, a full 50% would encourage a family member or friend to take the service. According to the company doing the investigation these are unheard of numbers. While the writer is unhappy and you seem to be as well, there are thousands and thousands of happy clients (like myself) who would not be without PPL because it has saved us thousands and thousands of dollars and provided us with peace of mind in a turbulent world.
8-14-2008 @ 10:31PM
tony said...
Who does not look at their bank statements for 10 months?
Anyways, my business has an account with pre-paid. We spend about $50,000 on attorneys per year. We signed up for pre-paid last year and still spend about that much. They can help you research and answer questions, but they don't perform as our other attorneys do. They really have not saved us any money
Reply
8-15-2008 @ 4:55PM
Scott said...
Been short selling any stocks lately Tracy? Are you friends with Melisa Davis or the Street.com?
If that website had ANY validity, PPL wouldn't have so many former state attorney generals invovled with their company. Two current State Attorney Generals are members of the company. Past presidents of the American Bar Association endorsing them and I could go on an on.
Legal Expense Plans work. They've been around since the 1930's in Europe and late 70's here. Face it, your problem isn't with Legal expense plans, it's with PPL and probably iggnornatly so, the fact that part of their business is marketed on a multi level basis. If you actually DID research, you'd find out that they've only been doing the networking marketing side for a short time, before that they were a direct sales company like any other legal expense or insurance benefit AND many do not partcipate in the multi-level, there are quite a few that only sell direct as an employee benefit.
Reply
8-15-2008 @ 5:32PM
Tracy Coenen said...
Scott - I'm not sure what my investments have to do with this discussion. I don't know anyone named Melisa Davis, and I've never been friends with any websites.
What you fail to consider is that many companies committing fraud have looked good and had many credible-sounding endorsements. Do you think they're going to ask people to endorse them and then say "Oh by the way, you should know we're a fraud"?
I'm afraid I've done a lot of research on Pre-Paid Legal, which has been beneficial in writing about it. I do know that the plan offers very little for members in return for their money. I also know that the associates aren't selling many memberships: Only 20% sold even ONE membership to a customer in 2007. That makes it clear that Pre-Paid Legal is primarily a recruiting scheme.
You should read Robert FitzPatrick's report on this company. It is eye-opening.
http://prepaidillegal.com/Q-2.2008.Update.pdf
8-17-2008 @ 12:58AM
Ced said...
Sorry to hear about Kate's situation. I do hope she gets it further resolved. Sounds to me like there were some oversights on Prepaid's behalf as well as hers. I can see where a customer service representative would wonder why a customer would complain after faithfully paying a 20 months. There must be a way to determine how the authorization to deduct $12.95 per month was initiated.
One point that might be looked into is the fact the Prepaid Legal membership and the Identity Theft Shield are two separate memberships. Here's a thought. Perhaps Kate only specified to cancel the Prepaid Legal membership and thought that would cancel the Identity Theft Shield membership as well.
Reply
8-19-2008 @ 12:18PM
Scott said...
Tracy,
If you don't understand what investing and short selling have to do with Pre-Paid Legal then you are not much of journalist.
If you don't think paying $17 per month to get your family's estate planning documents completed (Will, Living Will, Power of Attorney) along with ALL the other benefits they offer from writing letters on your behalf to fighting your speeding tickets, then you don't have much of a handle on anything to trial defense. By the way, I sell memberships on a regular basis. I recurit very little, maybe one associate per year if they are the right associate. PPL's top producer has already sold over 2,700 memberships since January 2008. Yeah, seems like a pryamid scheme to me.
Plus, what's wrong with recruiting? Ever hear of head hunters? Ever belong to a church? Guess what, they recruit new members. Ever work for real paper? Guess what...they recruit new employees all day long, just like any business or ogrinaization.
Did you know that almost all Fortune 500 compnaies sell part or all of their services through the network marketing system? I guarantee your health insurance, unless bought directly from the insurer, has several levels of agents receiving commission. In the future, please actually do some real research before you spew lies in your column or blog.
Buy a house or condo lately Tracy? Guess what, somebody besides your real estate agent made an override off it. Wow, what a scam huh?
Reply
8-19-2008 @ 12:57PM
Tracy Coenen said...
"Network marketing" is just another attempt by MLMs to hide behind a different name. No, most of the Fortune 500s don't use the MLM system to sell their products. Why? Because they have legitimate products that are in demand and they don't need to run recruiting scams to sell them.
You think what Pre-Paid Legal sells is valuable. I do not. The money spent on the membership is not worth it for most of the customers.
10-17-2008 @ 8:35PM
BullRun said...
Scott,
I generally do not blog or post responses; however your ranting deserves a reply. There is no doubt that you have been thoroughly brainwashed by the pyramid scheme sales propaganda. You seem like a fairly intelligent person (although undoubtedly misguided). A true indication of whether or not Pre-paid legal has any value in the eyes of the general public will be the percentage increase/decrease in memberships sold now that the economy has turned downward and people are cutting the fat. In response to your paranoia regarding short selling; as an investment analyst for one of the top two remaining investment banks let me assuage your fears by telling you that there is no short selling conspiracy against PPL. The fact of the matter is that PPL has little to no economic moat and very little earnings growth. Short float is what happens to companies that don't perform. Nobody's out to get PPL. You need not reply as I probably won't be back to this site.
8-25-2008 @ 5:07PM
David Pitts said...
I've been reading with great interest the posts here. Mainly because I've had one person say they didn't want the membership based on some negative things they've "heard" about Prepaid Legal Services. I'm a full-time Pastor and was introduced to Prepaid legal by a friend who is an attorney AND an associate in PPL. Believe me, I've checked the company out. I've only been an associate for three months. I got in simply to make some extra money and to plan for retirement. I don't mind sharing that in the three months I've made $461.63. And that's with only making about $70 the first month. I will probably come close to making that same amount in one month at the end of August. Am I getting rich? Not really. But that's $400 more than I had three months ago!
Something that may be of interest is that the National Association of Attorney's General (NAAG) recently endorsed the concept of Prepaid Legal Services (which by the way is a trademark of our comapany). The founder and CEO of the company was at that meeting. And the American Bar Association has endorsed us since 1978.
I am very clear when explaining how the benefits work for those who decide to take advantage of a membership. No surprises = satisfied members.
Reply
8-25-2008 @ 5:16PM
David Pitts said...
Something I meant to share in my previous post is that EVERY training meeting I've been to, whoever was leading the training, always emphasized: Never oversell the product or make promises. Always undersell and let the product over-deliver. I have found that members who have complaints have usually been misled by an associate not following the guidelines. I have also found that the disgruntled associates i've read about (I haven't met any personally) did not take advantage of the training opportunities nor did they follow the guidelines put in place to help them succeed.
I should add, that my out-of-pocket expense for being an associate, aside from the entry-fee is $0.00. I received everything I needed to start the business in my welcome packet. And based on my first month's performance, received more than enough supplies to continue without having to spend anything.
Reply
8-28-2008 @ 4:16AM
Travis said...
Tracy Coenen, YOU NEED TO VERIFY YOUR SOURCES AS CREDABLE BEFORE YOU POST.
The site you are telling people to look at (prepaidillegal.com) is a redirect URL to "The Fraud Discovery Institute" Which was founded by a man by the name of Barry Minkow, a "short seller" (which is a felony crime)
I think this is my favorite part, about Barry Minkow, the founder of Fraud Discovery Institute:
"Barry Minkow is an ex-con. He spent about 7.5 years (of a 25 year sentence) in prison and was ordered to pay $26,000,000 in restitution after being convicted on 57 counts of fraud."
Reply
8-28-2008 @ 9:21AM
Tracy Coenen said...
Wow, Travis. You're quite the investigator! NOT!
First of all, short selling is not a crime. It is a legal method of playing the stock market and it's done all the time.
And yes, Barry was convicted of fraud and he does not hide the fact.
I helped prepare the reports on www.prepaidillegal.com, so I'm quite sure about their credibility!
10-17-2008 @ 8:34PM
BullRun said...
Short selling is absolutely legal and in fact is a crucial element to the functioning of our markets. I do not know of this person or his methods of short selling and I am not commenting on his practices; but you should know that short selling is very legal, in fact you most likely have minute exposure to shorting or short derivatives (puts etc.) in your 401k or IRA. Companies and investors often use short selling as a way to hedge.