Deceptive Magazine Sales
By: Source: AARP Bulletin Today Date Posted: 2004-09-01 15:41:00-04:00
Vetahmary "Vicky" Higgins, 68, signed up for a trial subscription last year to Travel + Leisure magazine, published by American Express. Soon after, she says, she was billed $171 for merchandise she didn’t order—golf and cooking club memberships and a 2004 appointment book. Higgins says she was livid when those items turned up unauthorized on her credit card.
Such billing practices are "straight-out dishonesty," says Higgins, of Hermitage, Tenn. "It’s taking advantage of people."
Higgins’ lawyer, Christopher Thorsen, filed a lawsuit in January in a state court in Tennessee against three American Express subsidiaries. The complaint accuses American Express of fraud and deceit for its practice of billing cardholders for subscriptions, memberships and merchandise they did not order.
Responding to complaints, an American Express spokeswoman says it is not the company’s policy to bill consumers for unwanted merchandise. She also says charges to consumers are refunded immediately in such billing disputes.
Attorney James Reilly Dolan of the Federal Trade Commission says deceptive magazine sales have been on the FTC’s "top 10" list of complaints for the last three years. The FTC logged 516,740 such complaints in 2003; it received 204,334 complaints in 2001.
In negative option marketing, as the practice is known, consumers accept a "free offer" or agree to try a product, like a magazine or book club membership, on a trial basis. The marketers continue to send merchandise—and charge their credit cards—until consumers cancel in writing or by phone.
Some negative option deals can benefit consumers, providing ongoing services or goods without requiring customers to reorder each month or year. The trouble comes when sellers fail to disclose, clearly and specifically, what their "free" or "discount" offer entails.
"The company may tell you they have authorization to charge you [because] you dealt with so-and-so and that was our offer, but it’s their obligation to demonstrate they had appropriate authorization," Dolan says.
About 20 state attorneys general are investigating Time Inc. for practices involving billing consumers for magazine subscriptions and renewals they didn’t authorize. JoAnn Carrin of the Florida attorney general’s office says Florida logged 2,000 complaints.
Peter Costiglio, a Time Inc. spokesman, says, "We have had some discussions with the Florida attorney general but to make a presumption there’s a problem is a presumption that is not supported by the situation."
Dolan’s advice: Check credit card statements carefully. If any unauthorized charges show up, call the credit card company immediately and follow up with a letter; also call the company that billed you and ask why it believed it had the authorization to do so.
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