Pre-Paid Legal Services Inc.’s “Pyramid in Collapse” status – as characterized by nationally recognized and internationally known expert Robert Fitzpatrick – is re-confirmed in second quarter of 2009 figures, affirms Fraud Discovery Institute (FDI).
Since 2007, Fitzpatrick has characterized the current business cycle of Pre-Paid Legal Services Inc. (NYSE:PPD) based on published data, as “pyramid in collapse.” The second quarter of 2009 data adds to this portrait and further confirms this status.
All key indicators for the second quarter compared to the same period one year ago show significant and continuing declines:
. Recruiting of salespeople (called Associates), which is the engine of the entire business model, were down nearly 4% from the same period last year.
. The total number of Associates is not reported quarterly but only at the end of each calendar year. At the end of 2008, Pre-Paid Legal Services claimed a total of 425,018 Associates which represented a 4% decline from 2007.
. Recruitment of Associates for the first two quarters of 2009 is down over 23 percent from the same period last year. Recruitment of new Associates for all of 2008 was down 18 percent from 2007.
. The number of new members (retail customers) dropped 9% from the same period last year and the Q-2 of a year ago was down 4% from the previous quarter. The total number of memberships is down 4% from a year ago. Total new memberships sold in all of 2008 was down 10% from the year before.
Declines Stand Out in Business Sector:
Though the recession has damaged sales of many companies, Pre-Paid Legal Services’s accelerating declines stand out within its business sector of “direct selling.” Pre-Paid’s steep decline conflicts with the trends of large companies also in direct selling.
Screenshot from Pre-Paid Legal