Washington, DC - The Federal Trade Commission has charged the operators of dozens of companies with deceiving consumers by using fake newspaper subscription notices. The FTC seeks to stop the operation and obtain money for return to consumers.
According to the FTC’s complaint, through a complicated web of companies, the defendants send consumers “Notice of Renewal/New Order” mailers for subscriptions to newspapers such as The New York Times, The Wall Street Journal, The Seattle Times and The Denver Post, and for magazines. The notices claim that consumers’ subscriptions will automatically renew if they pay, and that the price – “one of the lowest available rates” – is authorized by the publisher.
In fact, the FTC alleges the defendants do not have publishers’ authorization and charge up to 40 percent more than the newspapers typically charge. Only in fine print on the back of the fake notices do the defendants state that they “do not necessarily have a direct relationship with the publishers or publications” – and that disclosure refers only to magazine subscriptions, according to the complaint.
Many consumers have complained about the fake notices, paying an inflated price, delays in receiving publications they ordered, or receiving the wrong publications. In some instances, consumers have paid twice for the same subscription.
Consumers who learned the defendants did not represent their regular newspaper and tried to cancel payment or obtain refunds have found it hard to reach customer service. Those who have reached the defendants often received no refund or only a partial refund, or they succeeded only after complaining to the Better Business Bureau or to state or federal law enforcement agencies.
More than 375 newspapers have told the defendants to stop, and many have placed “alerts” on their websites and/or in their publications to warn consumers. The complaint alleges that to circumvent law enforcement actions and publishers’ letters telling them to “cease and desist,” the defendants 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 individual defendants are Linda Babb; Shannon Bacon, also known as (a/k/a) Shannon Balero and Shannon Gordon (“Bacon”); Jeffrey Hoyal; Lori Hoyal; Colleen Kaylor; Laura Lovrien, a/k/a Laura Babb (“Lovrien”); Noel Parducci, a/k/a Noel Littlefield (“Parducci”); Lydia Pugsley, a/k/a Lydia Babb (“Pugsley”); Dennis Simpson; and William Strickler. The corporate defendants are listed in the complaint.
The Commission vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the District of Oregon, Medford Division.