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Post date: March 31 2015

A.G. Schneiderman Files Lawsuit Against Companies Over Allegedly Fraudulent Subscription Solicitations Sent Nationwide

New York Joined By Oregon, Minnesota, Missouri, And Texas In Filing Simultaneous Lawsuits To Stop Unlawful And Deceptive Business Practices And Seek Restitution For Consumers

Schneiderman: It Is Illegal To Trade On Name Of Reputable Publications And Trick Consumers Into Overpaying For Subscriptions

NEW YORK — As part of a coordinated law enforcement action, Attorney General Eric T. Schneiderman today announced that his office and the Attorneys General of Oregon, Minnesota, Missouri and Texas filed lawsuits against Orbital Publishing Group, Inc. and a ring of interrelated New York and Oregon companies for mailing millions of unauthorized and allegedly misleading magazine and newspaper subscription notices to consumers nationwide. The solicitations were sent without the permission of the publishers and stated that consumers were receiving “one of the lowest available rates,” when, in fact, they were being charged, in some cases, more than double the publication price. The companies then pocketed the difference.

“It is illegal under New York law to trade on the name of reputable publications and use deceptive advertising to trick consumers into overpaying for goods and services,” said Attorney General Schneiderman. “New York is home to the largest media market in the country and serves as headquarters to many of our nation’s most important newspapers and magazines. My office will work hard to protect New Yorkers from swindlers and to protect the business of reputable companies who play by the rules.”

“This sophisticated mail scam ripped off thousands of Oregonians and others across the country,” said Oregon Attorney General Ellen Rosenblum. “Consumers thought they were dealing with legitimate companies, and that they were paying the lowest available price. Instead, they sent payments to a dishonest third-party, who pocketed the money. As Attorney General, I will not tolerate dishonest or fraudulent business practices in Oregon.”

“They used deceptive ‘renewal’ notices to get people to unwittingly pay significantly more for their newspaper or magazine subscriptions,” said Minnesota Attorney General Lori Swanson.

Attorney General Schneiderman’s lawsuit, which charges violations of New York State law, alleges that, from at least 2010 to the present, the interrelated companies sent consumers unlawful solicitation notices designed to look like they came directly from at least 44 publications. The victimized publications include some of the nation’s leading periodicals, including Consumer Reports, National Geographic, the New York Times, the Wall Street Journal and the Washington Post.

The New York suit, filed today in Manhattan Supreme Court, seeks to stop the alleged illegal business practices, return money to consumers, disgorge any profits related to these alleged illegal activities, and penalties.

Attorney General Schneiderman’s lawsuit charges the companies violated Sections 349 and 350 of New York’s General Business Law, which prohibits deceptive business practices and false advertising, and Section 335-a of the General Business Law, which requires magazine renewal solicitations to disclose the month and year that the consumer’s subscription expires. The companies’ solicitations failed to provide this information. As a result, some consumers sent money to the companies to renew their subscriptions, not realizing that their current subscription had not yet expired. Other consumers complain that they sent payments to the companies but never received their subscriptions. Many of the consumers affected by the scam appear to be elderly.

The New York Attorney General’s office has received dozens of complaints from consumers across New York, including on Long Island, in New York City, the Hudson Valley, the Capital Region and Erie, Niagara and St. Lawrence counties, about misleading subscription solicitations from the companies named in the lawsuit. Thousands of complaints have been received by the Federal Trade Commission and the Better Business Bureau and the offices of the Attorneys General in the four other states filing suit today.

In an effort to stop the alleged abuse, many of the publishers – who complained to law enforcement and filed lawsuits in an effort to stop the alleged abuse – have issued cease and desist letters to the solicitation companies demanding that they stop sending unauthorized solicitations. Some of these publishers ran alerts on their websites and full page advertisements in their publications in an effort to warn their readers about scam solicitations. Dow Jones, in an affidavit filed as part of New York lawsuit, stated that it has spent $3.5 million in responding to the unauthorized notices, including by offering free subscriptions. American City Business Journals estimates that its subscribers, who were charged double the publication’s real subscription price, have lost as much as $120,000 as a result of the companies’ allegedly deceptive practices.

According to the New York lawsuit, the solicitation scams were operated by a labyrinth of corporate entities, which were allegedly created to disguise the scheme. The solicitation companies have used dozens of different names to solicit consumers, including Magazine Payment Services, Associated Publishers Network, Publishers Periodical Service, United Publishers Service, Publishers Billing Exchange, Publishers Billing Association, Publishers Billing Center, Magazine Billing Network, Publishers Distribution Services, Magazine Distribution Service and Subscription Billing Service. The solicitations generally contained a return address in White City, Oregon, Henderson, Nevada, or Reno, Nevada.

According to the court papers, once the companies received orders from consumers, typically at exorbitant prices, the companies sent a check to the publishers for the actual subscription price, so that the consumer’s subscriptions were started or renewed, and then pocketed the difference. For example, the companies charged consumers as much as $59.95 for annual subscriptions to Consumer Reports that cost $29.95. They charged Wall Street Journal consumers $599.95 for a one-year subscription that cost $413 at retail. The New York Times estimated that the companies charged consumers a price that is 30 to 40 percent higher than the actual subscription cost of The Times. Many publishers are no longer accepting orders from the companies.

In addition to Orbital, the Attorney General sued the following entities and individuals: Liberty Publishers Service, Inc., Express Publishers Service, Inc., Associated Publishers Network, Inc., Publishers Payment Processing, Inc., Adept Management, Inc., Customer Access Services, Inc., Consolidated Publishers Exchange, Inc., Magazine Clearing Exchange, Inc., Henry Cricket Group, LLC, Laura Lovrien, and Lydia Pugsley. Laura Lovrien is the alleged Chief Operating Officer of Orbital and president and secretary of Liberty Publisher. Lydia Pugsley is the alleged owner of Adept Management, Inc. Both Lovrien and Pugsley are alleged to have participated in the operations of the companies, including sending solicitations, receiving consumers’ payment and handling consumer complaints. Orbital Publishing Group, Inc., Liberty Publishers Service, Inc., Publishers Payment Processing, Inc. and Henry Cricket Group, LLC are incorporated in New York, but appear to be operating out of Oregon.

If you believe you were a victim of a magazine or newspaper subscription scam, please file a complaint with the Attorney General’s Office. Complaint forms are available here. You may also call the Attorney General’s Consumer Hotline at 1-800-771-7755.

This case is being handled by Special Counsel Mary Alestra, Volunteer Assistant Attorney General Daniel Park, Deputy Bureau Chief Laura J. Levine, and Bureau Chief Jane M. Azia, all of the Attorney General’s Bureau of Consumer Frauds and Protection, and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.