Lawsuits in five states charge companies with fraud in nationwide subscription solicitations scam
March 31, 2015
The states of New York, Oregon, Minnesota, Missouri, and Texas filed lawsuits Tuesday against Orbital Publishing Group and a ring of New York and Oregon companies for mailing millions of unauthorized and misleading magazine and newspaper subscription notices to consumers nationwide.
The solicitations were sent without the permission of the publishers and stated that consumers were receiving “one of the lowest available rates,” when they were being charged up to double the publication price. The companies then pocketed the difference.
“It is illegal under New York law to trade on the name of reputable publications and use deceptive advertising to trick consumers into overpaying for goods and services,” said New York Attorney General Eric Schneiderman.
The lawsuit seeks to stop the illegal business practices, return money to consumers, return profits related to the illegal activities, and penalties.
The New York Attorney General’s Office has received dozens of complaints from consumers in the state about misleading subscription solicitations from the companies named in the lawsuit. Thousands of complaints also have been received by the Federal Trade Commission, Better Business Bureau, and attorneys general offices in the four other states filing lawsuits Tuesday.
To stop the scam, many of the publishers – who complained to law enforcement and filed lawsuits – have issued cease and desist letters to the companies demanding that they stop sending unauthorized solicitations.
Some of the publishers ran alerts on their websites and full page advertisements in their publications to warn their readers about the scam. Dow Jones spent $3.5 million in responding to the unauthorized notices, including offering free subscriptions. American City Business Journals estimates that its subscribers, who were charged double the publication’s real subscription price, have lost as much as $120,000 as a result of the companies’ allegedly deceptive practices.
The solicitation scams were operated by a labyrinth of companies, which were created to disguise the scheme, according to the New York lawsuit. The companies used dozens of names including Magazine Payment Services, Associated Publishers Network, Publishers Periodical Service, United Publishers Service, Publishers Billing Exchange, Publishers Billing Association, Publishers Billing Center, Magazine Billing Network, Publishers Distribution Services, Magazine Distribution Service, and Subscription Billing Service.
The solicitations usually had a return address in White City, Ore., Henderson, Nev., or Reno.
When the companies received orders from consumers, usually at high prices, they sent a check to the publishers for the actual subscription price, so that the consumer’s subscriptions were started or renewed, and then pocketed the difference.
For example, the companies charged consumers as much as $59.95 for annual subscriptions to Consumer Reports that cost $29.95. They charged Wall Street Journal consumers $599.95 for a one-year subscription that cost $413 at retail.
The New York Times estimated that the companies charged consumers a price that is 30 to 40 percent higher than the actual subscription cost of The Times.
Many publishers are no longer accepting orders from the companies, Schneiderman said.
If you think you were a victim of a magazine or newspaper subscription scam, you can file a complaint with the Attorney General’s Office in your state and/or the FTC.
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