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.
"This determination confirms our belief in our life events legal service and identity theft plans and the ADRS program, and we are pleased to have this matter behind us," Pre-Paid Chairman Harland C. Stonecipher said in a statement issued by the Ada company.
Pre-Paid remains 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 Stonecipher as CEO and president and Tom Smith as director.
Pre-Paid sells subscriptions for a package of limited legal services through a multilevel marketing network of independent salespeople. The company also markets an identity theft protection product.
Shares of Pre-Paid gained 7 cents to close Tuesday at $49.10.