Publishing industry reacts to new scrutiny

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Several years after bad publicity over sweepstakes nearly killed one source of magazine subscriptions, the publishing industry is reacting much more swiftly to new threats.

As several state attorneys general study so called "negative option" marketing and one, Florida State Attorney General Bob Butterworth, looks specifically at the magazine industry, the Magazine Publishers of America is rushing to unveil its first "best practices" code expected to be out within a month.

"When you look at sweepstakes, I could say we won the battle, but we lost the war, because the war was in the public's mind," said Michael Pashby, MPA's exec VP-general manager. He noted that publishers and direct mailers worked successfully to minimize the impact of the law Congress eventually enacted, including requiring multiple no-purchase-necessary disclosures and limits on sweepstake forms that resemble government documents. But publicity about people buying numerous magazines to increase their chances of winning, traveling to Florida to pick up their "prize", or staying home to await the imminent arrival of the prize patrol significantly decreased return rates for new sweepstakes promotions.

"This time, before anything happens we want to be out there ... talking to Florida, talking to the Senate, talking to the [Federal Trade Commission] saying we are going to take control and we are going to set standards."

Several state attorneys general have said publicly they are eyeing buying clubs and a variety of marketing plans in which consumers sign up and then have to say "no" to stop orders. The immediate concern of magazine publishers may be Florida, where complaints about American Family Publishers sweepstakes and people heading to its Tampa headquarters to pick up winnings made Mr. Butterworth especially aware of issues in the magazine industry.

Florida Assistant Attorney General Victoria Butler last week confirmed the state has been conferring with executives of Time Inc., Gruner & Jahr, the Reader's Digest Association and Hearst Corp. about a variety of issues in which consumers claim they either got billed for magazines they didn't order, got offers of free magazines that became paid subscriptions without their knowledge, or had their subscriptions renewed without their realizing it. She said the investigation is in early stages and at this point the attorney general is just assessing the problems.

Ms. Butler said the issues with Hearst involve "simulated invoices." Issues involving the other three publishers involve the adequacy of notices given to consumers that their subscriptions were being renewed, or that the free magazines that they were being offered-often as a "reward" for purchases from catalogs or from various telephone marketers-could lead to paid magazine subscriptions. Ms. Butler said the attorney general's office has received nearly 400 complaints, some forwarded from other states through the Better Business Bureau, because Time Customer Service is located in Florida.

Peter Costiglio, a Time Inc. spokesman, said the company has been "having a discussion" with the Florida attorney general. "We are in the process of cooperating on some customer inquiries they have received." He said the inquiries have no common theme and include some complaints from consumers who forgot they ordered subscriptions.

Sue R. E. Geramian, director of corporate communications for Gruner & Jahr USA, said her company "is in total compliance with all applicable laws including those of the state of Florida. No legal action has been taken against us." She declined to discuss individual complaints.

Elizabeth Board, senior VP-director of global communications for the Reader's Digest Association, said that "as a matter of policy, [Readers Digest is] always happy to work with attorneys general to make sure consumers are served." She declined to discuss individual complaints.

A Hearst official did not return a call seeking comment.

MPA President Nina Link said the complaints prompt some concerns. "We are always concerned that consumers are comfortable," she said. "We need to make sure we are clear in the way that we talk to consumers."

Some publishers hope to move away from having to send out subscription notices. "When a consumer buys a newspaper, they don't even conceive that someone is going to send them a renewal notice," said Mr. Pashby. "They don't think that they are buying it for six months or a year. The same is true with cable TV, electricity, natural gas, and lawn service. One of the great opportunities for the magazine industry [is to switch to that model]."

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