Washington Times columnist cheated by Pre-Paid Legal

In the age of the internet, companies have to constantly worry about angry consumers telling the world their troubles. I'm thrilled that the internet has given consumers a voice. Previously, companies could do as they wished with their customers, and the chances of anyone finding out were slim. Now that's not the case as blogging is a tool available to anyone with access to a computer.

Companies need to be more careful in how they deal with customers, especially if their customers have a very large platform from which to shout about their experiences. Imagine what happens when a Washington Times columnist gets cheated by multi-level marketing company Pre-Paid Legal....

Kate Tsubata had a Pre-Paid Legal membership at one time, but quickly canceled it when she and her husband realized it didn't cover any of the things they needed and believed were covered. 20 months after canceling their membership, they realized that they had been charged $12.95 a month for a Pre-Paid Legal service they didn't sign up for.

They didn't realize that the company was taking money out of their bank account each month for an "identity theft protection" service that they never wanted and never authorized. And when Kate called the company to ask them to refund the money that was fraudulently taken out of their bank account, the company refused.

After some arguing, they finally offered to refund half of the money they had taken. Feeling totally cheated and entitled to a full refund of the money that was stolen, Kate declined their offer and instead informed them she'd be writing about the company in her column for the Washington Times.

Put aside for a moment your personal opinion on whether or not Pre-Paid Legal is a scam. Yes, plenty of people (me included) believe the company is nothing more than a recruiting scheme, made to appear legitimate with some flimsy "legal plan" that doesn't offer a whole lot to the members.

But this case is far more cut and dry than the pyramid scheme issue. It's an issue of right and wrong. Kate and her husband never signed up for the identity protection service, and never authorized money to be taken out of their bank account for it. How can employees of Pre-Paid Legal think they could give her anything less than a 100% refund of the money they took without authorization?

A situation like this is never pretty. Unfortunately for Pre-Paid Legal, when bloggers get hold of situations like this, it can create a storm of negative publicity. It will probably cost the company far more in the long run, as they will lose credibility with the people who might have otherwise become customers someday.

Oh well.... If that's worth offering only half of Kate's money back, then so be it. Personally, I think companies ought to be a little more careful wtih how they treat customers.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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