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Attorney General Lockyer Announces $8.8 Million Agreement with Time Inc. to Reform Subscription Practices, Compensate Consumers
Settlement with 23 States Ends Probe of Automatic Renewal Marketing, Billing Practices
(SACRAMENTO) – Attorney General Bill Lockyer today announced Time Inc. (Time) will refund to consumers up to $4.3 million, and reform its practices related to automatic renewals of magazine subscriptions, under an agreement between the publisher, Lockyer and 22 other state Attorneys General.
"As they seek to meet the demands of competition and the marketplace, companies cannot compromise fairness to consumers,” said Lockyer. “Every consumer has a right to be fully informed about the products they buy, and a right to not be charged for products they never asked for and do not want. That’s what this case is about. We’re pleased Time has agreed to reform its practices and provide restitution to consumers billed for unwanted subscriptions.”
The agreement – in the form of an Assurance of Voluntary Compliance (AVC) – will provide up to $828,463 to 20,238 eligible California consumers. The California restitution almost doubles the amount provided to consumers in any other participating state. Aside from the $4.3 million in refunds, Time will pay the 23 states a total of $4.5 million to cover their investigation costs.
The settlement resolves the states’ investigation into Time’s marketing and billing practices related to automatic renewal offers, its general billing and collection procedures, and its invoice look-alike solicitations. The states launched their probe after receiving complaints from consumers that Time was billing them or charging their credit cards for unwanted magazine subscriptions.
The complaints started after Time initiated an automatic renewal program that required consumers to affirmatively cancel subscriptions if they did not want them. The change broke with Time’s previous practice of offering limited-term subscriptions that customers could renew, if they desired, at the end of the term. Time made the change without adequately informing its customers, which caused confusion and generated numerous complaints.
Other consumer complaints focused on solicitations Time mailed consumers that appeared to be invoices and which lacked conspicuous disclosures required by law. The states’ investigation found that these mail solicitations misled some consumers into paying for unwanted or unordered subscriptions.
In the 23 states, more than 108,000 customers will be eligible to receive restitution. Eligible customers include many of those who paid for magazine subscriptions that were automatically renewed between January 1998 and May 2004.
Within the next three months, Time will send state-approved refund letters and claim forms directly to consumers who may be eligible. The letters will explain the settlement and contain instructions on how to apply for refunds. Consumers should look for an envelope from Time that says “REFUND OFFER ENCLOSED.” There is no need for consumers to contact the Attorney General’s Office to qualify or apply for a refund.
Aside from the monetary payments, Time agreed to adopt reforms of the practices targeted by the states’ investigation. Among the reforms, Time will:
● Clearly and conspicuously disclose to consumers all material terms for automatic subscription renewals. For the next five years, consumers will have the opportunity to affirmatively indicate whether they want to exercise the automatic renewal option. Before the end of the subscription period, Time will send customers written reminders of the automatic renewal, their right to cancel the subscription and the procedure for cancellation.
● 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.
● Not mail to consumers subscription solicitations that resemble bills, invoices or statements of accounts due.
● Not submit the unpaid accounts of automatic renewal customers to third-party debt collectors.