Iowa Department of Justice, Office of the Attorney General Release Tuesday, March 21, 2006.

Time Inc. is Required to Reform its Magazine Sales Practices

States were especially concerned with Time Inc.'s automatic renewal procedures, which allegedly resulted in consumers being charged for unwanted magazines.

Time Inc. has agreed to change several key marketing and billing practices in the wake of State Attorney Generals' concerns that Time was billing consumers or charging their credit cards for unwanted magazine subscriptions.

"One of our top concerns was that Time Inc. quietly initiated an automatic renewal method without clearly notifying consumers that they had to cancel a subscription if they didn't want it renewed," Iowa Attorney General Tom Miller said.

"Some consumers' subscriptions were renewed despite their desire to let them end, and then some consumers faced heavy-handed collection efforts by Time Inc. when they refused to pay."

The States alleged that the automatic renewal method altered a long-standing industry practice of subscriptions being renewed at the end of a subscription period only if the customer affirmatively requested a renewal.

Under an agreement finalized today with a total of 23 states:

In Iowa, 1,574 consumers will be eligible for a total of $61,636.77 in restitution. Within three months, Time Inc. will send refund letters and claim forms approved by the States directly to consumers who are eligible. (Consumers are identified in Time Inc. records and do not need to contact Attorney General offices to qualify for a refund.) Time must send the forms in an envelope that clearly says "Refund Offer Enclosed."

Time Inc. publishes TIME Magazine, Sports Illustrated, People, Fortune, Money, Entertainment Weekly, and many other magazines. According to its web site, it publishes over 150 magazines worldwide, and two out of three U.S. adults read a Time Inc. magazine every month.

Additional information on the Time Inc. agreement with the States:

The agreement with the States is called an "Assurance of Voluntary Compliance." It was reached between Time Inc. and the Attorneys General of AK, CA, DE, FL, HA, IL, IA, ME, MD, MI, MO, NV, NJ, NM, NY, OH, OR, PA, TN, TX, VA, WV, and WI. [The "Assurance".]

Time Inc. denied the States' allegations but agreed to provide clear and conspicuous disclosures to consumers concerning all of the material terms for automatic subscription renewals, and agreed to other terms of the "Assurance."

Regarding collection practices, the States argued that Time Inc. sometimes used heavy-handed collection practices that threatened the credit standing of consumers who did not fall in line, even though many of those consumers understandably felt that they were being billed for a subscription they had never purchased.

Regarding solicitations that appeared to look like invoices, the States argued that Time Inc. used direct mail solicitations formatted similarly to its invoices, which may have violated Federal and state laws that prohibit such solicitations without certain conspicuous disclosures that an item is not an invoice. The "Assurance" notes that the States believe that Time engaged in business conduct that had the capacity to be deceptive and misleading in violation of state consumer protection laws. For example, a busy consumer -- or sometimes a small business, such as a doctor's office or dentist's office -- might receive what looks like an invoice for a magazine, and pay it, even though it was in fact a solicitation.