| TRENTON
– Attorney General Zulima V. Farber
announced today that New Jersey has entered
into a multi-state settlement agreement
with Time Inc. which resolves allegations
that the company engaged in misleading practices
regarding magazine subscription sales.
Under terms of the settlement agreement,
Time will refund a total of approximately
$4.3 million to consumers in 23 states,
and pay a total of $4.5 million to cover
settlement-related costs and fees incurred
by the states. In New Jersey, Time is expected
to pay a total of $225,453 in refunds to
more than 5,000 consumers. Time will pay
another $75,000 to cover New Jersey’s
investigation-related costs and fees.
According to Attorney General Farber, the
settlement is the result of a multi-state
investigation into Time’s marketing
and billing practices regarding subscription
renewal offers, billing and collection procedures,
and subscription solicitations appearing
in the form of invoices. The states launched
their investigation after receiving consumer
complaints that Time appeared to be billing
subscribers for renewals they had not requested,
and charging subscriber credit cards for
unwanted renewals.
Farber explained that the root of many consumer
complaints was a departure by Time from
a long-standing industry tradition of selling
limited-term subscriptions that are only
renewed at the customer’s option.
In place of this practice – and without
adequate notice to customers -- Time implemented
an “automatic renewal” method
that required customers to pro-actively
cancel the subscription if they no longer
wanted it, Farber said. The states also
investigated complaints that Time mailed
consumers solicitations that appeared to
be invoices, and which lacked the conspicuous
disclosures required by law of such solicitations.
The states concluded that Time’s practices
misled some consumers into paying for unwanted
or unordered subscriptions.
“A
competitive market is no excuse for failing
to be clear with consumers,” said
Attorney General Farber. “We are committed
to ensuring that those who sell products
or services in New Jersey meet their responsibility
to do so lawfully, accurately and with integrity.
In any situation where it appears consumers
are being charged for products they have
not asked for, or are otherwise being misled,
we will take decisive action.”
Time Inc. denies each of the states’
allegations. However, the New-York-based
company has agreed under the settlement
terms to provide clear and conspicuous disclosures
to consumers regarding automatic subscription
renewals.
“Consumers
will again control the process when the
time comes to renew their subscriptions,”
said Kimberly Ricketts, Director of the
Division of Consumer Affairs. “Time
presents complex subjects in easy-to-understand
articles for its readers, and Time can make
its subscription offers to consumers just
as clear.”
For the next five years, consumers will
have the opportunity to affirmatively indicate
whether they want the automatic subscription
renewal option. Before the end of the prescription
period, Time will send its customers written
reminders of the automatic renewal, their
right to cancel the subscription, and the
procedure for cancellation. Time will also
honor all requests to cancel subscriptions
as soon as reasonably possible. If customers
are charged for magazines they did not order,
Time will refund the subscription price.
Under the settlement, Time will also refrain
from mailing solicitations to consumers
that resemble bills, invoices or statements
of accounts due. In addition, Time has agreed
to refrain from submitting the unpaid accounts
of automatic renewal customers for third-party
collection.
The multi-state settlement agreement with
Time pertains to eligible consumers who
made payments for magazine subscriptions
that were automatically renewed between
1998 and May 2004.
Within the next three months, Time will
be sending state-approved refund letters
and claim forms directly to about 5,150
New Jersey consumers who may be eligible.
As Time will be identifying eligible consumers
from its records, there is no need for consumers
to contact the Attorney General’s
Office directly to qualify for a refund.
The Time Inc. letters will explain the settlement,
and will contain instructions on how to
apply for refunds. Consumers should look
for an envelope from Time that bears the
message, “REFUND OFFER ENCLOSED.”
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