Whistleblower: Magazine renewal offers can inflate prices

A subscriber to TV Guide, National Geographic and four other magazines, John Manring is used to getting magazine renewal offers in his mailbox in St. Louis Park. "Sometimes I would get three or four in a day," he said.

Manring, who's 55 and works as an air traffic controller, occasionally wrote a check for the renewal without thinking about it. But about a year ago he decided to take a second look at what appeared to be an invoice from TV Guide.

A quick call to the publisher revealed that the mailing was a fake invoice generated by an unauthorized "agent" trying to get Manring to pay an inflated price for the magazine.

Recently he received offers from two companies for a year's worth of TV Guide. Publishers Services Center listed it at $69.95 and Allied Publishing Systems offered a seeming bargain at $59. TV Guide currently offers the same number of issues for $16.50 if you pay by credit card.

"I'm not anti-business. I'm pro ethical business. For me it's not ethical to charge twice as much for a subscription," Manring said.

It's unclear how the fake-invoice folks get hold of subscriber lists, but some publishers acknowledge they make parts of their lists available to certain parties. But rogue sellers have alarmed many publishing companies, who say their reputation suffers a hit when a customer never receives an order or finds out he or she has paid an inflated price.

Some publishers, including National Geographic Magazine and the Nation, have taken to posting lists of unauthorized sellers. National Geographic Society's consumer alert says that it is pursuing legal action and asks consumers to tell the company if they receive a solicitation.

According to the Better Business Bureau, one company, Publishers Billing Exchange, has at least 56 aliases: Readers Billing Service, Readers Payment Service, Publisher Processing Service, Publishers Service Center, and so on. The company has an F rating in part because of more than 725 complaints filed within the past three years.

In 2006, Crain Communications Inc., the Detroit publisher of Autoweek, Advertising Age and a couple dozen other magazines, sued a lengthy list of businesses and individuals for the unauthorized use of the trademark "AUTOWEEK," accepting orders but not passing them on to Crain, and damaging Crain's relationship with its customers.

The defendants denied all allegations and claimed their subscription sales were authorized by Crain. The suit was eventually dismissed. "We got to the stage where we thought we got the point across," said Peter Grantz, associate counsel for Crain.

Other publishers and state attorneys general have tried their hand at litigation, but most cases settled out of court or were dismissed. In a couple cases, agents have countersued for defamation or interfering with their businesses, but Whistleblower was unable to find one in which the agents prevailed.

There are some magazine subscription agents who are legitimate. Generally, these act as subcontractors of sorts for clearinghouses. Publishers and clearinghouses agree on a price to charge and clearinghouses hire agents to bring in the subscriptions.

Whistleblower called Publishers Services Center, responsible for two of Manring's recent solicitations.

An employee who identified herself only as Olivia said she works for 125 different companies. She refused to identify her employer, saying it's "proprietary information."

Olivia said that about half the time customers "can get a cheaper price through us," and when they can't "I usually tell my customers, you know, I would go with the better deal."

Olivia said her 125 companies are authorized to make sales, though one of those businesses, Publishers Billing Association, which offered Manring a one-year subscription to National Geographic for $59.95, is on National Geographic's don't-buy-from list.

By federal law, businesses sending solicitations disguised as invoices must print one of two lengthy disclaimers in a prominent place and in a type size that is about ⅜ inch tall, among other requirements. The disclaimer basically says "this is not a bill." The three solicitations Manring sent to Whistleblower had short disclaimers buried deep in the fine print.

A U.S. Postal Inspection Service document states that the post office will refuse to deliver any nonconforming mailings if they come to the attention of postal employees.

Inspectors have shown some interest in the issue in the past, "but it was never set up so they could do an extended investigation," Grantz said.

"We have our analysts go through our fraud complaint database and look for trends. If there are a number of complaints we can build it up into a larger case," said Brian Haraway, a Milwaukee postal inspector.

The problem of unauthorized third-party sales is not as bad as it used to be, Grantz said, but "they're clearly still out there." Crain has taken some measures to stem the flow including jettisoning some clearinghouses and stiffening hiring rules for others.

Grantz said unauthorized sellers have changed their methods. They now charge a much higher price, and send the subscription orders directly to the publisher without providing a return address. The orders come in with just the subscriber's information typed onto a scan of a subscription card, the kind normally inserted into magazines. Payment is by bank check.

The new practice also makes it harder for publishers to sue for damages, since they are paid in full for the subscriptions. Customers are the ones with the direct loss these days, Grantz said.

Those customers may very well slant to an older age group. "We do think they're taking advantage of customers that are more elderly and more likely to just pay the bill because they are more used to just taking care of bills," he said.

Most legitimate renewals will have your subscription expiration date on the renewal notice. Beware of those that don't. The address label on your magazine usually shows the proper date.

Before responding to a solicitation, check online or call the publisher to find out the current rate being offered for the magazine.

If you receive a solicitation disguised as a bill and it doesn't have a lengthy disclaimer in big, bold type, contact your postmaster or send the solicitation to the Postal Inspection Service at 1745 Stout St., Suite 900, Denver CO 80299-3034.

The Federal Trade Commission suggests you also report the mailing to the Office of Attorney General Lori Swanson or the Better Business Bureau.

Jane Friedmann • 612-673-7852