Pre-Paid's operation depends on recruitment of new "associates" who sell Pre-Paid policies and recruit other associates.
Pre-Paid's associate recruitment relies on telling better stories. At Pre-Paid sales conventions, thousands of associates and recruits listen to passionate speeches. The parking lots are full of Humvees, Mercedes, and Maseratis.
Len Clements, a multilevel marketing expert, offers an eyewitness account of 2000's Pre-Paid recruitment meeting. According to TheStreet.com, Clements listened to Tommy Vu, the 1980s infomercial star widely sued by disgruntled students of his $15,000 real-estate sales "boot camp."
"Tom Vu takes out a five-dollar bill and wraps it around the microphone stand," recalled Clements, "Then he asks the audience, �If I said you could take this $5 for $1 of your own, what would you say?'
But Pre-Paid's recruitment conventions exclude story-damaging details. According to Robert FitzPatrick, president of Pyramid Scheme Alert, these include:
The average Pre-Paid associate takes home under $3 weekly;
Many of Pre-Paid's 341,000 associates never recoup the $249 they pay to access the Pre-Paid "opportunity;"
Half its associates leave and half its customers terminate their policies annually; and
Pre-Paid prepays a year of sales commissions but forces associates to pay them back with interest if they don't meet their sales targets.
Stonecipher declined to comment on the number of levels in Pre-Paid's marketing structure, each level's number of people, its turnover, its average associates' earnings, or the percentage of associates who earn over $30,000. Such details might not make a good story.