Time Inc. Agrees to $4.5M Settlement in Subscription Probe

timeinc_probe.jpgFlorida Attorney General Charlie Crist has just announced a settlement between Time Inc. and 23 states over the company’s “improper marketing and billing practices.” Time Inc. will pay $4.5 million plus an additional amount — which could be as much as $4.3 million — to 108,000 eligible consumers for magazine subscriptions that were automatically renewed between 1998 and 2004.

An investigation into Time’s marketing and billing practices revealed that the company’s recent switch to an automatic renewal method misled some consumers into paying for unwanted or unordered subscriptions. When Time initiated the automatic renewal, many consumers were not adequately notified that they would have to cancel if they did not want their subscription continued. Time would then repeatedly bill customers and if not contacted by the customer, threaten to put their name in the “bad debt file” or refer them to the “consumer credit index.” As a result, many customers reported that they paid for unordered subscriptions out of fear that nonpayment would result in damage to their credit rating.

From Time Inc.:

Time Inc. Statement — March 21, 2006

Time Inc. has agreed to a settlement with 23 states. We have already adjusted some marketing and collection practices for clearer disclosure of automatic renewal subscriptions. Under the terms of the settlement Time Inc. will pay $4.5 million to cover investigative costs, to be divided by the 23 states, and we will also make a fund available to certain subscribers who respond to a claim form we will mail in June.

As part of the settlement, Time Inc. admitted no wrongdoing.

RELATED: PDF copy of the settlement