Is it possible that everything that is wrong about the way the American economy is structured could exist within a single company? Aflac suggests the answer may be yes.
When the company boasted the other day that it was using its corporate tax cut to boost its 401k contribution, it neglected to mention that the gift only applies, of course, to employees, while the vast majority of the company's workforce is 100% commission-based and many of them are even charged for the desk they sit in. This is the first part of a series we're doing on the company, by Dave Dayen: https://theintercept.com/2018/01/11/aflac-fraud-lawsuit-sales-associates/ (Also, it's worth the click alone to see the GIF of Melania Trump in a 2005 Aflac ad.)
Update on surveillance: Democrats caved and it passed the House, now it's on to the Senate. So Congress might seriously give Donald Trump expanded surveillance authority. Here's video dispatch for The Young Turks and here's Alex Emmons in The Intercept, along with a list of the Dems who voted with Trump.
THE INSURANCE FIRM Aflac has exploited workers, manipulated its accounting, and deceived shareholders and customers, according to nine former employees. This article is based on interviews with multiple current and former employees, as well as three previously unreported lawsuits.
The allegations contained in the lawsuits involve nearly every aspect of Aflac's business and have already led to a series of investigations by state and federal regulators. But though Aflac's top management and board of directors have known about the claims for over a year, they have not disclosed anything to shareholders in public filings with the Securities and Exchange Commission beyond generalities about unnamed pending lawsuits that they say they expect will not hurt the company's bottom line.
The revelations could damage the public image of the Columbus, Georgia-based insurer, a Fortune 500 stalwart that boasts about being named one of the world's most ethical companies for 11 consecutive years and one of the best companies to work for in America. But behind Aflac's facade, according to the former employees, lurks a company that fails to live up to promises made in employee recruitment.
"What they're doing is unfair," said Louis Varela, who spent three years as a sales associate for Aflac in New York City. The allegations pull together virtually every major corporate scandal of the past two decades into the behavior of a single company, drawing on the various misdeeds of for-profit colleges, Herbalife, Uber, Wells Fargo, Enron, Trump University, and more. Aflac spokesman Jon Sullivan responded to a detailed list of questions by saying the company "will not comment on pending litigation."
The allegations in the lawsuits include:
- Recruiting thousands of employees with promises of six-figure incomes in the first year, which ultimately less than 2 percent of new hires manage to earn
- Encouraging employees to sell policies to friends and relatives and recruit them into the company, akin to a multi-level marketing scheme
- Widespread misclassification of employees as independent contractors, despite Aflac controlling virtually every aspect of the work experience
- Much like at Wells Fargo, employees under pressure to meet sales goals selling policies without customer authorization or consent, illegally "bundling" policies, and issuing others to ineligible customers
- Wage theft, where commissions rightfully owed to associates are transferred to managers
- At least one charge of sexual harassment
- Massaging of key operational metrics to prove company growth to investors
- Earnings statement manipulation, by moving sales earned in certain weeks into different quarters to hit numbers
- Retaliation against whistleblowers
Employees initially presented the allegations to management through official company channels in December 2016, at which point Aflac management categorically denied them. However, the company thereafter made several changes to its recruiting materials, compensation plan, and operational metrics, suggesting at least some validity to the claims — or a striking coincidence.
Aflac President Paul Amos II, the grandson of the founder, abruptly resigned in June to join a boutique private equity firm, receiving a $3.4 million golden parachute. Four days after the announcement, Amos sold off 222,889 shares of stock, nearly half his total holdings, for $17 million. Other Aflac executives have sold large blocs of shares recently; data from Nasdaq indicates 481,000 shares have been purchased by insiders in the past 12 months, while 2.182 million shares sold.
FULL STORY
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