AG James Wins More Than $16 Million In Magazine And Newspaper Subscription Scam Lawsuit

AG James Wins More Than $16 Million in Magazine
and Newspaper Subscription Scam Lawsuit

Ring of Companies Permanently Prohibited from Mailing Unauthorized
and Deceptive Magazine and Newspaper Subscription Solicitations

NEW YORK – New York Attorney General Letitia James today announced a victory for more than 68,000 New Yorkers who were victims of deceptive and illicit solicitations from the operators of an illegal and fraudulent magazine and newspaper subscription scam. A decision by the New York State Supreme Court awarded more than $16 million to New York State in restitution and penalties, as well as permanently enjoined a ring of New York and Oregon companies and one individual from further conducting their illegal operation that could have affected millions of additional New Yorkers in the future.

“The subscription to New Yorkers’ hard-earned money is cancelled for these deceptive magazine and newspaper companies,” said Attorney General James. “This decision sends a message that, as the nation’s media headquarters, New York will not serve as a safe haven for those who aim to cheat, scam, and defraud our consumers. This is an important victory for the millions of New York consumers, who could of have been victims in the future.”

The Office of the New York Attorney General filed a legal proceeding against Orbital Publishing Group, Inc., and its interrelated New York and Oregon companies, in 2015, for mailing millions of unauthorized and misleading magazine and newspaper subscription notices to consumers nationwide over a three-year period. While the solicitations appeared to come directly from such leading publications as Consumer Reports, The Economist, Entertainment Weekly, Forbes, The Nation, National Geographic, The New York Times, The New Yorker, Newsweek, Smithsonian, Time, The Wall Street Journal, and The Washington Post, Orbital Publishing and its related companies were really the ones sending the mailings. These solicitations — sent without the permission of the publishers — prompted many of the publishers to send cease and desist letters, which Orbital Publishing and its affiliate companies ignored. 

The companies conveyed the misleading impression that they were offering one of the lowest rates available for subscriptions to the named publications, but, in reality, they were charging many consumers more than double the subscription rate charged directly by the publications. In many cases, Orbital Publishing pocketed the difference between the amount they received and the actual subscription price. Additionally, the companies also failed to “clearly, conspicuously, understandably and readably” indicate subscription expiration dates on their renewal solicitations — as required by New York law — causing many consumers to renew subscriptions that had not yet expired.

In a decision earlier this year, the New York Appellate Division, First Department held that respondents’ solicitations were materially misleading as a matter of law. 

Based on the First Department’s decision, the New York State Supreme Court this week permanently enjoined Orbital Publishing and its affiliated companies from further violating New York State law and engaging in the fraudulent and illegal practices originally noted in the lawsuit brought forth by the Office of the New York Attorney General. The court also directed respondents to pay more than $16 million in penalties, restitution, and costs. 

The Federal Trade Commission also brought an enforcement proceeding against the same ring of related entities and individuals in the United States District Court for the District of Oregon in 2016. In 2019, the District of Oregon permanently banned the defendants in the FTC’s case from direct mail marketing and imposed an $8.9 million judgment against the corporate defendants and three individual defendants. 

The other related companies that were the subject of the lawsuit brought by the Office of the New York Attorney General included Liberty Publishers Service, Inc.; Express Publishers Service, Inc.; Associated Publishers Network, Inc.; Adept Management, Inc.; Publishers Payment Processing, Inc.; Customer Access Services, Inc.; Consolidated Publishers Exchange, Inc.; Magazine Clearing Exchange, Inc.; and Henry Cricket Group, LLC. Lydia Pugsley — who owned Adept Management, Inc. and performed consulting services for a number of other related companies — was also named in the lawsuit and found by the court to be individually liable. 

This case is being handled by Special Counsel Mary Alestra, under the supervision of Deputy Bureau Chief Laura J. Levine and Bureau Chief Jane M. Azia — all of the Consumer Frauds and Protection Bureau. Senior Data Analyst Akram Hasanov from the Research and Analytics Department provided additional support, under the supervision of Jonathan Werberg, Director of Research and Analytics. The Consumer Frauds and Protection Bureau is part of the Division of Economic Justice, which is overseen by Chief Deputy Attorney General Christopher D’Angelo and First Deputy Attorney General Jennifer Levy. The appeal was handled by former Assistant Solicitor General Seth M. Rokosky, under the supervision of Deputy Solicitor General Steven C. Wu and Solicitor General Barbara Underwood.