Primerica: Predatory MLM?

With a couple of threads about Primerica over on the Pink Truth Discussion board, the Primerica defenders have been sending me emails to sing the company’s praises. So here’s a little about the company and its multi-level marketing structure.

Primerica is a Part of Citigroup

Yes, Citigroup is a household name. That doesn’t mean that it’s subsidiary is good, right or ethical. What it means is that someone at Citigroup realized what a cash cow an MLM is for the owners of the company. Citigroup then purchased Citigroup.

Primerica is Multi-Level Marketing

No matter how many times representatives of Primerica say that the company is not an MLM, that doesn’t change the fact that it is. The company’s website says (bold added by me):

Personal Income
Primerica has more than 100,000 representatives.  Actual gross cash flow is, among other factors, dependent upon actual organization size, the number of sales and the override spread on each sale, and the ability and efforts of you and your downlines. There is no guarantee that you will achieve any specific cash flow level.  Commissions are subject to deferred compensation account withholding and applicable taxes. RVPs are responsible for their own business expenses and pay for all office expenses for their base shop representatives. The Company may from time to time modify, supplement or terminate any compensation program in any manner. Further details are available from Primerica Financial Services, Inc.

No Inventory to Buy

If you can get a Primerica supporter to admit that the company is an MLM, the next argument is that it’s not “bad” like other MLMs. They don’t have inventory frontloading like MLMs that are product-based. That’s true, but that doesn’t mean that Primerica is immune from abuse of representatives.

MLM is Abusive to the Participants 

As with just about all other MLMs, the “real” money is made in recruiting. Can representatives, in theory, make a living selling only the Primerica financial services? Yes. And in reality, a very, very small number do. It’s difficult to make commissions on what you personally sell in Primerica because the commissions must be split among many levels.

Therefore, more money can be made with recruiting. But again, those living wages are made only by those at the very top of the pyramid. And your chances of getting there are almost nil.

I have searched the internet for stories about the predatory practices of Primerica, and have found lots of examples. Here are a few.

About the scam in general, from Rip Off Report :

  • Almost everyone I have ever met is familiar with the pyramid profile of the agencies of Primerica and how they deliberately go after sound permanent insurance plans of other companies, including their own policies written by their parent company, the Travelers Group. What many don’t know is that their term policies are more expensive than those of the companies they seek to replace and they are not convertible into permanent insurance when the client is ready to retire.
  • Yes, the MAIN goal is not the insurance – the agents make little selling their worthless and expensive term plans, but in the refinancing of debt, which is usually at a rate far higher than anyone could get just by going to their local bank or mortage company. Once all the ‘wood’ is removed by the termite agents of Primerica, the clients are left with an expensive mortgage, no permanent life insurance, dubious investments and nothing left to hang their hats on. Once they go back to charging and debt production, they are soon upside down, have no permanent insurance plans to borrow on, or equity in their mortgage and their investments have gone south.
  • (Note that Rip Off Report says that Primerica is a decent company because they have good customer service. Nice, but that doesn’t address the MLM issue.)

Primerica representatives are known for inviting people to fake job interviews . They find resumes online or they advertise for jobs, and after speaking with you for a few minutes, invite you to a job interview. (Which you can imagine, is really an MLM recruiting meeting.)

If they have to trick people into coming to recruiting sessions by pretending the people are getting job interviews, what does it say about the scam?