Time, Inc., penalized for subscription practices

CHICAGO—Illinois Attorney General Lisa Madigan has announced she has joined attorneys general and consumer advocates from 22 other states in reaching a settlement with Time, Inc., pertaining to allegations the publishing giant misled consumers by automatically renewing magazine subscriptions, and then aggressively collected on bills.

As a result of the settlement, Time, Inc., will refund up to $4.3 million to consumers, including $278,823.26 in restitution to approximately 6,640 Illinois consumers.

The settlement is the result of an investigation led by a group of attorneys general into Time, Inc.’s marketing and billing practices. The multi-state group specifically investigated the magazine publisher’s automatic renewal offers, billing and collection procedures and solicitations that appeared to be official invoices.

“Consumers should never be tricked into purchasing something they don’t want,” Madigan said. “I am pleased that as a result of this multi-state investigation and settlement, Time, Inc., has agreed to use clear marketing practices in selling its magazines to consumers.”

The group investigated complaints that Time, Inc., was billing consumers or charging their credit cards for unwanted magazine subscriptions.

Beginning in 1998, Time, Inc., broke with the long-standing industry tradition of limited-term subscriptions that are renewed at the customer’s option at the end of the subscription term.

In its place, and without adequately informing customers of the change, Time, Inc., initiated an automatic renewal method that required the customer to cancel the subscription if the renewal were not wanted. This practice generated significant customer confusion, and numerous complaints.

The states also investigated complaints that Time, Inc., mailed solicitations that appeared to be invoices and lacked the conspicuous disclosures required by law. The multi-state group concluded that Time, Inc.’s practices misled some consumers into paying for unwanted or unordered subscriptions.

As part of the settlement, Time, Inc., has agreed to provide clear and conspicuous disclosures to consumers concerning all of the material terms for automatic subscription renewals.

For the next five years, consumers will have the opportunity to affirmatively indicate whether they want the automatic renewal option. Before the end of the subscription period, Time, Inc., will send customers written reminders of the automatic renewal, their right to cancel the subscription and the procedure for cancellation.

In addition, Time, Inc., has agreed to honor all requests to cancel subscriptions as soon as reasonably possible. If customers are charged for magazines they did not order, Time, Inc., has agreed to refund the subscription price.

Finally, Time, Inc., has agreed not to mail solicitations for subscriptions that resemble bills, invoices or statements of accounts due. In addition, Time, Inc., will not submit unpaid accounts of automatic renewal customers for third-party collections.

Time, Inc., will refund $4.3 million to more than 108,000 eligible consumers who made payments for magazine subscriptions that were automatically renewed between 1998 and May 2004. In Illinois, 6,641 consumers may be eligible for refunds totaling $278,823.26.

Within the next three months, Time, Inc., will send state-approved refund letters and claim forms directly to consumers who may be eligible. The letters will explain the settlement and contain instructions about how to apply for refunds. As Time, Inc., will be identifying eligible consumers from their records, there is no need for customers to contact the Attorney General’s office to qualify for a refund. Consumers should look for an envelope from Time, Inc., that says “REFUND OFFER ENCLOSED.”

Under the agreement, Time, Inc., also has agreed to pay $4.5 million for the costs incurred by the states in investigation and negotiation.

In addition to Illinois, the states participating in this settlement agreement are Alaska, California, Delaware, Florida, Hawaii, Iowa, Maine, Maryland, Michigan, Missouri, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Virginia, West Virginia and Wisconsin.

Assistant Attorney General Karen Winberg-Jensen is handling the case for Madigan’s Consumer Protection Division.

From the May 3-9, 2006, issue

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