Pennsylvania Attorney General Corbett Announces $8.8 Million Multi-State Agreement with Time Inc. Following Investigation into Deceptive Magazine Rene

22 March 2006

Attorney General Tom Corbett today announced a nearly $9 million agreement with 23 states including Pennsylvania and Time Inc. ending an investigation into claims that the company deceptively marketed and billed consumers for magazine subscription renewals from 1998-2004.

Corbett said the national settlement will change the way Time Inc. solicits consumers for magazine subscription renewals and requires the company to pay $4.3 million in consumer restitution, plus $4.5 million to the states for investigation costs. In Pennsylvania, nearly 6,600 consumers are eligible to receive approximately $275,000 in refunds.

According to states' investigators, Time was billing consumers or charging their credit cards for unwanted or unordered magazine subscriptions. The agreement claims that the automatic renewal offers were designed to resemble billing invoices.

Many previous Time subscribers believed the notice that they received in the mail was actually an outstanding bill and they paid it - not realizing that they were in fact renewing their magazine subscriptions.

Investigators said, prior to 1998, Time gave its customers an option to renew their magazines at the end of the subscription period. That method, according to the agreement, was replaced with an automatic renewal plan requiring customers to cancel their subscriptions if they no longer wanted to receive the magazine. The company was accused of not adequately informing customers of the change, and failing to conspicuously disclose the specific terms of the subscription renewal process, as required by law.

"We believe that many Time magazine subscribers paid this notice under the belief that it was a billing invoice for the outstanding amount that they in fact owed," Corbett said. "Other Time magazine subscribers said they received several of these notices and only reluctantly paid it in fear of repercussions such as a legal action or adverse credit reporting. This deceptive or perceived scare tactic method to renew a magazine is at best unfair and at worst illegal."

Under the terms of the agreement, Time Inc. admits no wrongdoing and agrees to:

* Pay $4.3 million to more than 108,000 eligible consumers nationwide who

eventually paid for magazines after receiving repeated invoice-like

notices or bills between 1998 and May of 2004.

* Provide clear and conspicuous disclosures to consumers concerning all of

the material terms for automatic subscription renewals.

* Cease using magazine renewal solicitations that resemble bills, invoices

or statements of accounts due.

* Halt submitting unpaid accounts of automatic renewal customers for third

party collections.

* Provide consumers for the next five years an opportunity to

affirmatively indicate whether they want the automatic renewal option.

* Send consumers, before the end of the subscription period, written

reminders of the automatic renewal, their right to cancel the

subscription and the procedure for cancellation.

* Honor all requests for subscription cancellations.

* Refund customers if they are charged for magazines that they did not

order.

Corbett said within the next three months, consumers eligible for refunds will receive a state approved refund letter and claim form directly from Time Inc. The packet will explain the settlement and contain instructions on how to apply for a refund. Consumers need not contact the Attorney General's Office to qualify for a refund. The packet from Time Inc. will be marked "REFUND OFFER ENCLOSED."

The Commonwealth's case was negotiated by Senior Deputy Attorney General J.P. McGowan of the Attorney General's Bureau of Consumer Protection Office in Scranton.

The multi-state agreement includes Delaware, Maryland, New Jersey, New York, Ohio and West Virginia.

CONTACT: Barbara Petito

Deputy Press Secretary

717-787-5211

petito@attorneygeneral.gov

Source: prnewswire

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