Entertainment Giants Settle Massive Telemarketing Case
Attorney General Spitzer today announced an agreement with Ticketmaster and Time, Inc. - a division of AOL Time Warner - to reform their practices in the sale of magazine subscriptions.
Both companies settled allegations that consumers who ordered tickets over the phone were misled by Ticketmaster phone operators into accepting magazine subscriptions for Time publications.
Since at least 1999, Ticketmaster has been "up-selling" magazine subscriptions to customers who contacted the company to buy tickets to various events around the state and nation. Ticketmasters’ operators would offer an eight-week free trial subscription to either Sports Illustrated or Entertainment Weekly, depending on whether the tickets purchased were for a sporting event or for an entertainment event.
At the expiration of the free trial period, the consumer’s credit card account, which had been given to Ticketmaster for the tickets purchased, was automatically charged for a 27-week subscription unless the individual had affirmatively canceled during the free trial period.
Spitzer’s office alleged that consumers were not given adequate disclosure that their credit card accounts would be charged after the free trial period ended without cancellation by the customer. Many consumers mistakenly believed that their credit card accounts wouldn’t be billed for the magazine subscription unless they informed Time that they wanted the subscription to continue and gave their billing information directly to the magazine company.
Spitzer’s investigation revealed that of the approximately 96,000 New Yorkers who received the free trial offer of a magazine during the initial period of this selling campaign, more than half acted to cancel their subscription only after they discovered a charge on their credit card accounts.
"My office will aggressively pursue cases against companies that lure consumers with ‘free’ trial offers for products or services and then charge their credit card accounts without the individual’s direct consent," Spitzer said. "This agreement will ensure that adequate disclosures are made during ‘up-selling’ campaigns so that consumers can make better purchasing decisions."
In settling the case, Ticketmaster and Time agreed to disclose explicitly to consumers before sending any magazines:
The specific amount that will be charged to the credit card account for the subscription and that it will be automatically charged unless the consumer acts to cancel;
- That Time will charge the same account the consumer used to purchase tickets from Ticketmaster;
- The duration or number of issues in the free trial;
- The number of issues or length of a subscription if an automatic renewal charge is used; and
- The method by which a consumer can cancel.
After such information is provided, the telemarketer must specifically ask and receive an affirmative agreement from the consumer to these terms and not just to receive a free trial offer.
In addition, within 10 days of a consumer’s acceptance of the offer, Time will send the consumer a written acknowledgment with instructions on how the consumer can cancel. Time also will give at least 15 days written notice to customers prior to automatically renewing a subscription.
Time will make refunds to any consumer who files a complaint within the first half of a subscription asserting that he or she did not order a subscription or authorize a credit card charge.
Ticketmaster and Time agreed to pay the state a total of $75,000 to cover the costs of the Attorney General’s investigation.
Spitzer’s office has had an on-going investigation into the growing practice whereby companies use "free" trials for products or services to lure in consumers and then charge their credit card accounts for continuing memberships or subscriptions without their express consent or knowledge. In the past 16 months, Spitzer has settled cases against Memberworks (August 2000), BrandDirect (January 2001), Signature Financial Marketing (October 2001), Triad Discount Buying (October 2001), and Provell (which formerly did business as Damark) (December 2001) for similar practices.
Individuals with complaints that they did not consent to a magazine subscription when ordering event tickets through Ticketmaster are encouraged to contact the Attorney General’s consumer help line at (800) 771-7755.
This case was handled by Assistant Attorney General and Director of Consumer Advocacy Stephen Mindell and Assistant Attorney General Herbert Israel of the Consumer Frauds and Protection Bureau.