Time Inc. Settles Multi-state Investigation
Attorney General Spitzer today announced that his office has joined 22 other states in an agreement with Time Inc. settling concerns over billing and collection practices.
As a result of the settlement, approximately 108,000 consumers nationwide who made payments for magazine subscriptions that were automatically renewed between 1998 and May 2004 may be eligible for up to $4.3 million in refunds. Nearly 10,000 New York consumers may be eligible to receive over $425,000 in refunds.
"A consumer's ability to make good purchasing decisions begins with the adequate and meaningful disclosure of all significant terms and conditions of a contract," Spitzer said.
Time Inc. - which publishes over 150 magazines worldwide including Time, People, Sports Illustrated, This Old House, Entertainment Weekly, Fortune and Popular Science - settled a multi-state investigation into its automatic renewal offers and solicitations designed to resemble invoices.
Specifically, the states investigated numerous consumer complaints that Time was billing consumers or charging their credit cards for unwanted magazine subscriptions. These complaints arose when Time broke with the long-standing industry practice of limited-term subscriptions that are renewed at the customer's request at the end of the subscription period. In its place, and without adequately informing customers, Time initiated an automatic renewal method that required consumers to affirmatively cancel at the end of the subscription period to avoid being billed for a renewal subscription.
The states also investigated complaints that Time mailed consumers solicitations that appeared to be invoices and lacked the conspicuous disclosures required by law. The states concluded that Time's practice misled some consumers into paying for unwanted or unordered subscriptions.
In resolving the matter, Time has agreed to:
- Provide clear and conspicuous disclosures to consumers concerning all the material terms for automatic subscription renewals and, for the next five years, provide consumers the option to affirmatively choose an automatic renewal option. In addition, Time will send those consumers who have chosen an automatic subscription renewal written reminders, including information on the right and procedure to cancel;
- Honor all requests to cancel subscriptions as soon as reasonably possible and to provide refunds to consumers charged for magazines that they did not order;
- Stop mailing solicitations to consumers for subscriptions that resemble bills, invoices or statements of accounts due; and
- Not submit unpaid accounts of automatic renewal customers for third party collections.
In addition, Time agreed to pay $4.5 million to the states, including $75,000 to New York in costs.
Within the next three months, Time will be identifying and directly contacting eligible consumers through State-approved refund letters and claim forms. These letters will provide instructions to consumers about how to apply for refunds.
This matter was handled by Assistant Attorney General Herbert Israel and Special Assistant Attorney General Stephen Mindell of the Consumer Frauds and Protection Bureau.