Last Wednesday the Federal Trade Commission (FTC) filed a complaint in U.S. District Court for the District of Oregon, Medford Division, alleging that dozens of third-party subscription companies have defrauded consumers, including subscribers of the Denver Post, by charging inflated renewal rates. The companies have no relation to the magazines and newspapers they claimed to represent.
According to the Denver Post, in 2014, some of its subscribers received renewal notices from companies including Associated Publishers Network, Platinum Subscription Services and Publisher’s Billing Exchange that drastically overcharged annual subscribers.
Claiming they offered the lowest renewal price available, the third-party companies charged Denver Post subscribers $489.95 for a one-year subscription, about $200 more than the actual cost of a seven-day-a-week print subscription. The companies renewed consumer subscriptions at the actual cost, and then kept the difference.
Some consumers tried to cancel their payments or get refunds from the offending companies, but they had difficulty reaching customer service representatives, said the Denver Post. Some consumers were able to get partial refunds, and others successfully got their money back after filing complaints with the Better Business Bureau or their local police departments.
Overall, subscribers from more than 375 publications including The New York Times, The Wall Street Journal, The Washington Post, Forbes and others have fallen prey to this nationwide scam.
Last year attorneys general in five other states – New York, Oregon, Minnesota, Missouri and Texas – filed suit against magazine and newspaper subscription services for similar practices. Those suits alleged that Oregon-based Orbital Publishing Group Inc. and eight other third-party subscription companies have been mailing out solicitations since 2010, says the Denver Post.
In a separate action, last December, Arizona Attorney General Mark Brnovich sued Publishers Service Office for allegedly making 48,000 calls monthly to consumers to sell new subscriptions and renewals.
“This office will aggressively investigate telemarketing scams and hold individuals who defraud Arizona consumers responsible,” said Brnovich. “We are working with state lawmakers to introduce legislation that will make it more difficult for deceptive telemarketers to operate in Arizona.”
Publishers who were victims of the scam have handled the problem in different ways. Some have put ads in their publications to warn consumers of the scam, while others have given away free subscriptions. The Wall Street Journal, for example, gave out about $2.6 million in free subscriptions to 7,000 readers who had responded to the scam, said the Denver Post.
Insider Take:
Scams like this hurt the entire subscription industry, whether your company sells magazine or newspaper subscriptions, software as a service, or streaming video or music subscriptions. The best way we can combat fraud like this is to remain vigilant and to prosecute third-parties who claim to act on our behalf.
We can also mitigate the impact by warning our subscribers of scams they might encounter and to communicate clear pricing and renewal procedures to our customers, so they know what to expect. Kudos to the FTC and the affected states for fighting on behalf of publishers and their subscribers!
~ Dana E. Neuts, Senior Staff Writer, Subscription Insider
