Two years ago, newspapers began warning consumers that subscription renewal notices, which ask for your credit card and personal information, may look legitimate, but are more than likely a ploy by unscrupulous companies to get their hands on your money. Today, the Federal Trade Commission took a step to rein in this scheme by suing the operators of dozens of interrelated companies that send out such notices.
Operating under names like Readers Payment Networks, Readers Magazine Services, Customer Access Services, and Circulation Network Services, these companies are accused of sending bogus “Notice of Renewal/New Order” notices under the names of legitimate newspapers and magazines.
According to the FTC complaint [PDF], since 2010 the companies have sent notices claiming that customers’ subscriptions would automatically renew if they paid, and that the price, which was “one of the lowest available rates,” was authorized by publications such as The New York Times, The Denver Post, The Atlanta Journal Constitution, and The Arizona Republic.
In reality, the companies were not authorized to provide subscription renewals and the prices reflected up to 40% more than the newspapers actually charged.
“Defendants have no affiliation with any of the referenced newspapers and have no preexisting authorization to solicit, sell, accept, receive payment for, or secure newspaper subscriptions or subscription renewals,” the complaint states. “The mailings are not subscription notices from, or authorized by, newspaper publishers.”
While the notices did contain fine print that stipulated the companies “do not necessarily have a direct relationship with the publishers or publications,” the disclosure refers only to magazine subscriptions.
In order to protect consumers, the FTC says more than 375 newspapers and magazines have told the fake subscription notice companies to stop. In some cases, the publication have placed “alerts” on their websites or inside their publications to warn subscribers, or refused to accept subscription requests that come from the fake renewal companies.
To circumvent these actions and publishers’ letters telling them to “cease and desist,” the complaint alleges that the companies have created shell corporations to process and submit orders paying the publishers’ normal subscription rate and pocketed the additional amount the defendants received from consumers.
The FTC says it has received complaints from consumers about the fake notices, many which involve accusations of inflated prices, delays in receiving publications, or receiving the wrong newspaper or magazine.
In some cases, the FTC complaint shows that customers who learned that the subscription service wasn’t related to real newspapers tried to cancel payments or obtain refunds.
That process proved to be difficult, with many consumers noting it was hard to reach customer service, and those who did get through often never received a refund or only obtained a partial payment.
With its lawsuit, the FTC seeks to stop the operations and provide refunds to consumers affected by the renewal scheme.