Magazine publisher Time Inc. has reached a settlement with 23 states after a probe into its subscription renewal practices, according to a statement from the Pennsylvania attorney general.
Under the agreement, Time Inc., owned by media conglomerate Time Warner Inc., will pay $4.5 million to recoup the states' costs for investigation and establish a fund for consumers' restitution.
The Pennsylvania attorney general said Time Inc.'s payout would amount to $4.3 million if all affected consumers respond.
Time Inc. admitted no wrongdoing as part of the settlement, according to the attorney general's office.
Investigators for the states found that Time had billed consumers or charged their credit cards for "unwanted or unordered" subscriptions, the attorney general's office said. In addition, automatic renewal offers were designed to look like billing invoices.
"This deceptive or perceived scare tactic method to renew a magazine is at best unfair and at worst illegal," Tom Corbett, attorney general of Pennsylvania, said in a statement, referring to the practice of sending consumers renewal notices that appeared to be bills.
In a statement, Time Inc., the biggest U.S. magazine company and publisher of People and Entertainment Weekly magazines, said it already provides clearer disclosure of automatic renewal subscriptions.
Some Time Inc. magazine subscribers said they believed billing notices were outstanding bills and not renewal notices, the attorney general's office said.
More than 108,000 U.S. consumers who received "invoice-like" renewal notices and bills between 1998 and May 2004 are eligible to be compensated, it said.
