2023 1129 - Affidavit - Douglas M. Brooks - Primerica vs. Marco Moukhaiber - [Always Marco] - 39p

  • 2 - My testimony will specifically address Primerica’s use of deceptive earnings claims as well as its emphasis on recruiting large number of new representatives rather than on encouraging representatives to develop viable businesses.
  • 2 - Deceptive Earnings Claims
    • 9. One of the common problems I have observed with MLM companies is the widespread use
      of deceptive earnings claims. Primerica is no exception. There are two categories of earnings
      claims at issue here. The first is the “official” Primerica earnings claim made on its website.
      The second are the numerous claims made by Primerica Representatives, including on
      various social media sites.
    • 4 - 19. In my opinion, based on the widespread incidence of deceptive earnings claims by Primerica
      Representatives, as documented in the “Infiltrating a Pyramid Scheme: Primerica” video and
      the TINA investigation, Primerica’s compliance efforts are utterly inadequate.
  • 4 - Emphasis on Recruitment
    • 5 - 25. Thus, the same technique, the “warm market approach”, is to be used both for selling
      Primerica’s products and recruiting new Representatives. There is no difference between
      potential purchasers of Primerica’s products and prospective recruits to become Primerica
      Representatives.
    • 5 - 26. Another example of the mixing of the recruitment function and the retail function is at Page
      4 of Primerica’s 2022 Form 10-K, where Primerica describes the typical sales process:
    • 6 - While Primerica may solemnly declare that the Representative’s purchase of Primerica’s
      products is optional, it is clear that Primerica’s financial success depends on having a large
      number of Representatives also be customers. Primerica’s 2022 Form 10-K sets forth at page
      4 the numbers of new recruits for the years 2020, 2021 and 2022.10 At page 10 it sets forth
      the number of new policies sold for those same years.11
      29. Comparing these two sets of numbers is revealing: Year New Recruits New Policies Sold Ratio (new policies/new recruits)

      • 2022 359,735 291,918 .81
      • 2021 349,374 323,855 .92
      • 2020 400,345 352,868 .88
    • 6 - 32. Primerica acknowledges that it experiences high attrition among its Representatives. At the
      end of 2020 it had 134,907 representatives qualified to sell life insurance.12 During 2021
      Primerica added 39,622 new life-insurance qualified representatives, out of a pool of 349,374
      new recruits.13 However, at the end of 2021 Primerica had only 129,515 life-insurance
      qualified representatives.14 This means that during 2021 Primerica lost 45,014
      representatives.
    • 6 - 33. During 2022 Primerica added 45,147 life-insurance qualified representatives.15 However, at
      the end of 2022 Primerica had a total of 135,208 representatives.16 Accordingly, during 2022
      Primerica lost 39,454 representatives. The high attrition rate explains the importance of
      recruiting in the Primerica system.