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Some professional shorters I know that know a lot more about this stuff than
I do, researched it. Liked it a lot, as a short.
In a message dated 3/25/02 4:37:15 PM Pacific Standard Time,
paulha@xxxxxxxxxxxxx writes:
> Folks:
>
> In my latest dealings with yet another salesman promising me something for
> nothing, I've been approached by a Pre-Paid Legal (NYSE:PPD)
> salesman. This is yet another annoying multi-level-marketing scheme, in
> this case to provide legal insurance to the masses.
>
> Naturally, I've been unable to get them to give me a simple, horsey and
> duckey, explanation of their business model. Mostly the pitch is that
> "everyone else except you is buying legal insurance, and it's terribly
> exciting." The only substantive info I've been able to get is that it's
> $26/month, and that approx 1/3 goes to the salesmen out in the MLM tree,
> 1/3 goes to corporate, and 1/3 goes to the law firm.
>
> My question: why would any law firm be willing to lay off all of PPD's
> insurance risk, for a mere $8.33/month? Sure, some customers will go
> months or years before using the service, but it wouldn't require much
> customer time, for a law firm to go broke.
>
> And if it's such a great business for the law firms, why don't they fire
> PPD and pool together to create their own competition to PPD?
>
> I just don't get how this business works. Any comments?
>
> Paul
>
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