FTC ends 3-year investigation of Pre-Paid Legal

by louabbott on July 28, 2010

According to the Oklahoman and Pre-Paid Legal (PPD), this investigation has been settled with the FTC . . .

ADA — The Federal Trade Commission’s three-year investigation into the marketing practices of Pre-Paid Legal Services Inc. is ending without any action against the company, Pre-Paid said Tuesday.

The agency in 2007 launched an investigation into Pre-Paid’s marketing of its Identity Theft product and the company’s Affirmative Defense Response System, a program Pre- Paid developed to boost its group sales.

Last year, regulators alleged Pre-Paid made misleading claims about the effectiveness of its Affirmative Defense Response System to help organizations with government security requirements. In response, Pre-Paid revised its marketing materials.

However, staff members of the Federal Trade Commission in November proposed a complaint to its commission seeking monetary penalties, Pre-Paid disclosed in a regulatory filing. In February, Pre-Paid officials met with the agency to explain its disagreement “and to reach a mutually agreeable solution,” the filing with the U.S. Securities and Exchange Commission said.

Subsequently, the agency decided to drop the matter, the company said Tuesday.

Evidently, Pre-Paid is still the subject of an informal inquiry by the SEC, which issued a subpoena seeking documents related to the company’s stock repurchase program, customer complaints about Pre- Paid’s provider law firms, the business’ efforts to comply with payment card industry requirements and the resignations of Harland Stonecipher as CEO and president and Tom Smith as director.

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