We all know the story.

In Sept, 2019 Prudential paid a staggering $2.45 billion for insurance lead generator Assurance IQ.

By April 30, 2024 the company was shuttered.

So what happened?

I tried talking about this back in May but emotions were just too raw. People were just not ready to have a postmortem and I respected that.

But now, five months later, I think its time to have the discussion. Even if it hurt.

So… what happened?

While there were always concerns about the profitability of Assurance there were to contributing factors to my eye: i) massive concern over the FCC’s new 1:1 rule and the viability of the platform; and ii) perhaps more importantly, a massive $21MM TCPA settlement this year that rocked the company and Prudential.

Taking the second piece first.

I am informed that the settlement was not the “but for” cause of the demise of Assurance but it cast a long shadow over a decision that may have already been under consideration. This makes sense. For a company that was already struggling with profitability for years to stroke a $21MM check over operations that were core to its business– that’s a big deal.

I don’t want to pat myself on the back here, but it is public record that I previously represented Assurance in a different TCPA class action. That one did not settle for $21MM, or any amount in the seven figures. We handled it. But when Prudential came in they switched counsel. Fine, no problem, that happens. Doesn’t bother me at all.

But the results were quite different for Assurance when new counsel got involved.

On March 6, 2024 preliminary approval was granted to a $21,8750,000 settlement to resolve claims the compay had called wrong number using a prerecorded voice without consent.

The man behind the settlement on the plaintiff’s side– Mike Greenwald. “Mr. Number 1” as he is known in TCPAWorld given his back-to-back stint on top of the TCPAWorld power rankings (although he currently sits at number 2 in this year’s rankings.)

In less than 60 days after the preliminary approval, the company was out of business. The settlement didn’t even make it to final approval before the company shuttered.

And the messed up part? Prudential still paid the settlement.

In September, 2024– just last month– the money was paid and Greenwald and co. walked away with $8,750,000.

That’s more than the company’s laid off workers received (or so it appears.)

Talk about profiting from the misery of others.

Notice that this settlement arose out of wrong number calls. I have said many times the toughest TCPA cases to defend are wrong number prerecorded call cases– and that is exactly what Assurance was facing. And in the lead gen context it is ipossible to avoid calling wrong numbers–consumers fat finger numbers all the time.

The other piece of the “pull the plug” decision was headwinds from the FCC. The company was struggling even with a more generous lead generation regulatory environment. A switch to one-to-one consent would make it more challenging for Assurance to either buy or sell leads– handcuffing the marketplace in a manner that it hadn’t dealt with previously.

it all added up to a losing proposition and Prudential pulled the plug.

So what are the lessons here:

1. When acquiring a company MAKE SURE TO UNDERSTAND THE IMPACT OF THE TCPA ON THE BUSINESS. I have been pulled in late to review diligence on a ton of deals and I am always SHOCKED by how little an acquiring company may know about the MASSIVE risk to a business model posed by the TCPA;
2. Use every tool in your toolkit to avoid wrong number calling. The Reassigned Numbers Database is an obvious one. But other tools also exist. I can help you design a process to avoid class action suits around wrong numbers as well (I know of another massive settlement involving a household name I am not discuss yet out of respect for the claims process BTW. This is an ongoing risk!);
3. Take the new one-to-one rule seriously. Prudential was likely smart enough to understand the new rule would cripple Assurance and shut it down. If you intend to stay in business in this space you need to comply and now! Lots of tools to help you!