Pre-Paid Legal stock fell Thursday after the Ada company released information regarding a proposed draft complaint from the Federal Trade Commission as part of an inquiry that began more than two years ago. The firm’s stock started the day at $41.13 a share and closed at $33.27, a drop of more than $7, or 19 percent.
Randy Harp, Pre-Paid Legal’s chief operating officer told the Tulsa World the FTC is not questioning its product. “What the FTC is questioning is really a marketing approach that we use,” Harp said. “They’re not questioning the underlying products.”
Under scrutiny is how the company presents information regarding its identity theft line marketed under the name “Affirmative Defense Response System (ADRS)." According to the regulatory filing, Pre-Paid Legal’s sales associates offer training to employees of client businesses. At issue is that Pre-paid encourages those businesses to hold mandatory employee meetings to give its salespeople a chance to sell subscriptions to its legal services and identity theft products.
Source: Ada Evening News