Pre-Paid Legal, Pyramid Schemes, and Religion

This post was originally written for the Skepchick website back when it was an on-line magazine rather than a blog. I twas later run on the blog. However, neither version of it still survives, and as such, I figured I would post it here. In the past I have at least attempted to contact them and let them know that I was re-posting stuff that I had originally written for them on my own blog. But as they have never actually replied to any such email, I'm not bothering this time around. If any of them read this and don't like that I re-posed it, they can contact me and let me know.

I entered the room and took my seat. I was there out of male stupidity. I had been invited by an attractive young woman, but, from what I had been told, I sincerely doubted that I would have any interest in buying the product that I had been told would be pitched. The dress of those around me – dark suits for most of the men and long skirts and pale blouses on most of the women – reinforced the notion that I was in business-land. Little did I know that I was about to be subjected to what amounted to the financial and psychological equivalent of a cult indoctrination.

The meeting was allegedly a sales pitch for the products hocked by a company called Pre-Paid Legal, a company that sells legal insurance. When I met Lucy (not her real name) at a party the previous week, she had invited me to the meeting, indicating that it would be simply an opportunity for me to hear about their products. What I discovered was that the entire “meeting” was structured as a religious gathering, geared at getting the audience to shut-off their critical faculties, and that the product that Pre-Paid Legal really wanted to sell was not legal insurance, but rather a pyramid scheme.

Pyramid schemes, Ponzi scams, and other such matters have gotten a fair amount of attention in skeptical circles. Typically, those who fall for them are labeled as greedy fools who didn’t bother to question what was really going on because they either were too stupid to get it, or else they allowed avarice to cloud their judgment. If my experience this evening was any indication, while greed plays an important role, the techniques used to hook and reel-in the unlucky participants may be just as important.

The Invitation
This had all started innocently enough. I was at a party at a friend’s house, and found myself in conversation with Lucy and her housemate. She had recently dropped out of college. When I asked why, she told me that she had found a job and no longer needed college. I then found myself in conversation with her about this, with me trying to convince her that she would find things easier in the future if she went back to college, and her insisting that she had found a company where she wanted to work the rest of her life in a manner reminiscent of a teenage bride who is convinced that nobody understands her (doomed) love.

As the evening began to come to an end, she invited me to attend a meeting at a local hotel in order to hear about her company’s products. While I wasn’t keen on buying legal insurance, I was interested in trying to meet up with Lucy again, and so I accepted the invitation and gave her my phone number. A few days later, she called to tell me the time and location of the event.

Religious Indoctrination
Upon reaching the hotel the night of the presentation, I noticed a general sense of desperate hope among the people assembled and waiting to be let into the room. I saw people who I recognized from the party as being part of the Pre-Paid Legal (PPL) team circulating and herding people into the meeting room once it was opened. At the door, a pair of other PPL folks tried to get the name and contact information for everyone entering the room (being the sort of person I am, I just walked in and ignored their pleas for me to give them my information).

I found a seat, the doors closed, and the sermon began. It quickly became apparent that we were not there to be sold legal insurance – we were there to be sold positions within PPL. Yep, this was a pyramid scheme, and as with all pyramid schemes, promises of riches were made to those who would plunk down some of their hard-earned (and in the cases of at least a few of the people in the room, desperately needed) cash in order to buy a “job.”

I did not choose the word sermon by chance or out of sarcasm, this sales pitch was, quite literally, a sermon. God was replaced by PPL, salvation by money, morality and earthly good by the material possessions that one could purchase with said money, and mother church by the pyramid scheme (AKA “Network Marketing,” AKA “Multi-level Marketing,” AKA “an absurd scam”, and so on…). Just as in many churches, the audience was encouraged to speak in unison at key moments (usually shouting words such as “opportunity,” “choice,” “money,” and so on). The origin of the company (a mythical story about the founder’s run-in with litigation) and many dramatic stories of people having the finances and often freedom saved by PPL were thrown out to an increasingly credulous audience. To add to the drama, a few different speakers approached the front, and would often begin weeping at key moments, showing the joy and overpowering emotion of having become one of the upwardly mobile (the financial equivalent of the “saved”), and having met their new friends through PPL (they would consistently indicate the troupe of grinning clones sitting on the sides). The message was cleared – join PPL and you will not only make money, but you will also be helping to save people, and you’ll gain the oh-so-bestest friends that you ever did have!

Just as in many churches, the sermon came to and end with testimonials where the faithful (those who had already made a commitment to PPL) were encouraged to tell their stories both to try to convert the heathen masses, and to reinforce the social pressure on those already involved. At the end of all of this, people were invited to come up and plunk down their money to purchase a position with PPL, just as the heathens are welcome to come up to the front of many churches after a service in order to be converted. No mention was made of the many controversies that PPL had been involved in (and talking with the “associates” later, I learned that they were woefully ignorant of these things as well), no discussion of risk/benefit analysis of putting one’s money into PPL was provided, and there was no mention made of the other players in the legal insurance industry (in fact, it was often implied, if not flat-out stated, that PPL was the only significant player, despite the fact that many larger, more stable and reliable insurance companies are in the field).

While there were many charts and figures projected on the screen at the front of the room to give the evenings activities the outward appearance of a business meeting, the structure was strictly that of an evangelical church service, and the language a mix of mythological and out-of-context business lingo, all aimed at both convincing the audience that this was a legitimate business meeting, and in getting the audience to feel well towards PPL without stopping to think critically about the financial and personal investment that they would be asked to make.

In short, this was less a business meeting than a religious indoctrination ritual that borrowed the tactics of Evangelical, Pentecostal, and Charismatic Christianity for a financial end.

Feel – Don’t Think
What bothered me most about the situation was seeing the enraptured look on the face of the people sitting around me. Listening in on conversations before we entered the room, it became clear that many of these folks were desperate. They were unhappy with their lives and their jobs (those who were lucky enough to be employed), and simply hoped for positive a change. Some had been told, as I had, that this would be a sales pitch for legal insurance, but most had been brought with the hope that they would find new employment, and they were desperate enough for a change that they wanted to believe. I do not know if PPL makes efforts to actively recruit these sorts of folks, but this was the result that I saw that evening.

Once these folks, who wanted to believe and were therefore vulnerable, were brought into the meeting room, the entire presentation, as described above, was geared at getting them to believe and not question. Watching the people in the seats around me, and listening to the chatter afterwards, it was clear that this sermon had accomplished its task, at least for the evening. Why wasn’t I also drawn in? Perhaps it’s because I have been to enough religious services at enough different types of churches to recognize the methods when I saw them. Perhaps my training as an anthropologist led to me to see the patterns behind the behaviors. Perhaps the fact that I am immediately suspicious of anyone who wants me to give them money is what tipped things. Perhaps it’s the fact that the evenings “special speaker” reminded me less of a sensible businessman and more of an especially slimy dope-peddler. Regardless, there appeared to be frighteningly few of us in the room (including many of the established PPL folks) who saw the night’s event for what it really was.

The entire structure of the evening, from the outburst of weeping on the part of the presenters, to the encouragement of people shouting back slogans and buzzwords was all geared towards a basic goal: make the audience feel that they are part of a select group, smarter than the rest, able to see an opportunity when it comes, and feel a sense of euphoria about it. Doing this in a group setting further allowed the organizers to make use of the tendency for people to become locked in a pack mentality, to not want to be the one nay-sayer in a room full of believers, to push people who might otherwise have been skeptical over the threshold into convert. That the euphoria was for a false cause and the opportunity illusory did not matter, because once they were hooked, PPL would get their money. These people were encouraged to link a good feeling about PPL to a good feeling about themselves, and critical analysis of the situation, the sort of thing that would show the situation for what it was, was discouraged.

Creation Myths and Other Confusions
In addition to the use of a religious sermon format, the PPL presentation borrowed from Protestant Christianity in another way – it used a creation myth to justify its existence and explain its mission.

The myth runs as so:
Harland Stonecipher was involved in an automobile accident in 1969. After the accident, he found himself being sued for by the other party in the accident, an unwarranted move as Stonecipher had not been at-fault. Faced with mounting legal fees and damages assessments, staring down a convoluted legal system that he did not understand, Harland felt lost and afraid. However, like any good mythological hero, he overcame and triumphed in the end.

The memory of this accident stayed with ol’ Harland, and he saw it as both a problem and a potential opportunity. Eventually he realized that he could help other people (and, it should be noted, stuff his own wallet) by offering legal insurance of the sort that he knew existed in Europe. This insurance would save the finances of those who, like him, were taken by surprise by a litigious individual. Moreover, this would help those who found themselves in trouble with the law and who might otherwise have to rely on overworked public defenders.

Now, Pre-Paid Legal is a booming business, publicly traded, well-respected by the legal community, and will probably cure cancer (okay, I made that last one up). All hail Harland Stonecipher, the great savior of mankind!

The truth of the matter was rather different. Stonecipher was indeed involved in an automobile accident. However, he was not immediately subject to an unprovoked lawsuit. Rather, he filed suit against the other party for a sum of $125,000. The other then filed suit against Stonecipher afterwards and settled for the much smaller sum of $3,000 (Cohen 2003). While Stonecipher’s suit may have been justified (I do not claim to know one way or another), the fact that he sued first and was then subject to a suit for a smaller amount of money does corrode away some of the hero-veneer with which he was laminated in the materials released by PPL.

Moreover, the product, legal insurance, is not the unique province of PPL. In fact many companies provide legal insurance, many with better coverage at better rates than what is offered by PPL. A number of employers offer legal insurance along with health insurance as part of a benefits package. When I asked an attorney who I know about PPL, they simply said “well, you can get better coverage elsewhere.” So, the wonderful and unique product of PPL is neither unique nor wonderful, it’s not even reputed to be particularly good. Our old pal Harland did not offer something new to humanity, contrary to the creation myth. He didn’t even offer something that was any better than what already existed. However, you would never know that from the legion of hard-sell masters whose methods, both as employed at PPL and elsewhere, have gotten the negative attention of many state regulators (Davis 2002).

On top of that, it has become open to debate whether or not PPL even provides the services it claims to provide. At least one court in Mississippi has decided that PPL has failed to provide the services advertised and as such was guilty of fraud (Davis 2005) (and Federal regulators have required that PPL begin reporting their profits in a more honest manner [Davis 2005]), and many folks I have encountered who have had dealings with PPL have told me horror stories concerning their inability to actually make use of legal insurance when they needed it. It is worth noting that roughly half of the folks who buy policies do not renew them at the end of the year (Davis 2002).

So, the origin is a myth. The value of the alleged product (as opposed to the one actually being sold, i.e. the “sales position”) is debatable and therefore largely mythical. Is it at least true that you can make a lot of money doing this? Well, sort of.

There are those who make a lot of money, but they are the ones who are extraordinarily successful at selling others on the idea of being a salesperson, those who actually spend their time selling the legal insurance are likely to lose money (Davis 2002; CBC News 2000). Moreover, the majority of those who recruit others into the company still don’t make much money on the deal (CBC News 2000). So, there are a few who do manage to make money at this, sometimes a fair amount of money, but they are few and far between, they do so not on the strength of their product but by pulling others into the cult of Stonecipher, and even these folks tend to have to jump from company to company (or scheme to scheme, as it were) as these schemes are not good long-term investments even if you are successful with it, the mathematics eventually causing the whole thing to fold in on itself (‘lectric Law Library N.D.).

As Cohan (2003) put it, the pitch is full of good stories, but these stories don’t stand up to scrutiny. Unfortunately, the structure and setting of the pitch is such that many in the audience shut off their critical faculties and buy into it without applying that critical scrutiny.

Quoting Scripture
The coda to my PPL experience came two days later. Lucy called me up and asked why I had not committed to PPL that night. I simply stated that I was not impressed. Lucy pressed further, asking why I was unimpressed, so I told her that if she would give me twenty minutes I would explain.

I explained the basic instability of pyramid schemes, whether they call themselves Network marketing, multi-level marketing, or by any other name. I explained that I could see three possible futures for PPL – it burns out (like most pyramid schemes) and she is left empty-handed, it finally crosses the line (or is finally found to have crossed the line) of what is legal and is taken down by the authorities, or it becomes a standard insurance company and the current crop of salespeople find themselves increasingly disadvantaged, if not quickly unemployed, in a more standard corporate hierarchy.

She disregarded all of this and simply stated that she believed that I wasn’t “seeing the opportunity” (a phrase that was often repeated throughout the sermon a few nights earlier). I responded that I did see what was happening, I suspected I could see it more clearly than her, and that I was not interested, and I was again told that I was “obviously not seeing the opportunity.”

It was at this point that Lucy began quoting scripture. No, really. PPL has produced a good deal of material aimed at keeping the faithful recruiting. These materials are filled with inspirational stories (which, given the truth behind the Stonecipher story, I am not inclined to take on face value), and logically fallacious sayings aimed at shutting down the critics and converting the heathens. The next twenty minutes were spent with her quoting what amounted to “Chicken Soup for the Pyramid Scheme Soul” at me, me pointing out why I wasn’t buying it, her becoming frustrated, and then quoting another PPL tract, clearly wanting me to see the error of my ways. In the end, I was halfway shocked that she didn’t announce that she would pray to Ponzi and his messiah Stonecipher for my deliverance.

When it became clear that I wasn’t biting, she asked to put me in touch with someone higher up the food chain who, she felt certain, would be able to get me to see what I was missing. I declined. When at last the phone call ended, I could read the heavy sense of rejection and disappointment in her voice of the sort that I often hear from frustrated evangelicals upon discovering that they are unable to answer the questions of someone they’ve marked for conversion.

Religion, Symbols, and the Stifling of Free Thought
Whether what I experienced is common to PPL or simply the hard-sell method of a particular cell of folks within PPL, I cannot claim to know. What I do know is that it is no surprise that someone attempting to sell a shaky business model with a questionable product would resort to the methodology of born-again religion to do so. After all, both use emotion to push the convert to feel that they have made a good choice and are somehow superior the masses (whether because they are “saved,” allegedly “helping people,” or “on the road to riches”) and both fall apart when an intended convert begins asking tough questions. The difference is that born-again religion may have some beneficial effects for the average convert, while some basic research into the company suggests that PPL is simply likely to drains their bank account.

Ultimately, the reason why so many people in the room that night were entranced by the PPL pitch, despite its lack of logic or legitimate evidence, was that they were sold a set of symbols. The stories, images, and promises that were made were provided in a way orchestrated to imbue them with meaning, with values, and to question the legitimacy of the stories was to question the legitimacy of the values that they seemed to exemplify.

By leaving out a few relevant details, Stonecipher’s story of the accident and legal case takes a run-of-the-mill story of litigation and imbues it with the power of what many perceive to be out-of-control litigation and the helplessness that many feel when faced with the law. It provides hope to deal with these fears in the person of Harland Stonecipher, who single-handedly re-invented the way that legal representation works to save the masses. The story becomes mythic, it is imbued with meaning, it tells of the heroics of an individual, and how you can join him. To show intelligence and inquisitiveness and question the story is to question the legitimacy of what PPL is doing and the righteousness of the PPL converts, and in turn to question the opportunity for you to be a hero (and, or course, make wads of cash while doing it).

There were many other stories told the night of the pitch, and each of them had one thing in common with the story of Stonecipher’s auto accident: they took a rather mundane story and imbued it with meaning so that the act of selling either insurance or memberships through PPL became something more than a simple occupation. One thing priests have known for centuries – it’s harder for the faithful to question a story imbued with meaning than one that is not, and it’s easy for the infidel to be impressed by the conviction of those who are energized by myth, even if the story doesn’t match up with reality.

Amen.

CBC News. 2000. Pre-Paid Legal Services: Worth the Money? Broadcast on April 11, 2000.

Cohan, Peter. 2003. Pre-Paid Legal is in Need of Better Reality, not Better Stories. OKC Business, July 28, 2003.

Davis, Melissa. 2002. Pre-Paid Legal’s Colorful Workforce. The Street.Com, available online on July 10, 2006 here. Davis, Melissa. 2005. Pre-Paid Weathers Guilty Verdict. The Street.Com.

Electric Law Library. N.D. How to Avoid Ponzi and Pyramid Schemes.