Pre-Paid Legal Services Inc., a network of independent law firms, said Thursday that the Federal Trade Commission may sue the company over allegedly misleading representations made by its identity theft prevention program.
The news sent the stock plummeting 19 percent to close at $33.27.
The identity theft program offers regular monitoring of credit reports, sending alerts if new accounts are opened in a customer's name or if negative items are added to credit reports. It also offers to help a customer restore their credit rating if they are a victim of identity theft.
Pre-Paid Legal Services, based in Ada, Okla., said the FTC had sent a draft of the proposed lawsuit and may decide to formally sue. The draft also names CEO Harland Stonecipher and Chief Marketing Officer Mark Brown as defendants.
The company had received notice in March 2007 that it was under civil investigation by the FTC over its Identity Theft Shield and Affirmative Defense Response System. It said it had voluntarily revised its marketing materials and provided them to the FTC in 2007 and 2009.