Time Inc. Settles Billing Probe

Magazine publisher Time Inc. has reached a settlement with California and 22 other states after a probe of its subscription renewal practices.

Under the agreement announced Tuesday, Time Inc., owned by media conglomerate Time Warner Inc., will pay $4.5 million for the states’ costs for investigation and establish a fund for consumers’ restitution.

The Pennsylvania and California attorneys general said Time Inc.’s payout would amount to $4.3 million if all affected consumers responded.

Time Inc. admitted no wrongdoing as part of the settlement.

Investigators for the states found that Time had billed consumers or charged their credit cards for “unwanted or unordered” subscriptions, state officials 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,” Pennsylvania Atty. Gen. Tom Corbett said in a statement, referring to the practice of sending consumers renewal notices that appeared to be bills.

California Atty. Gen. Bill Lockyer said: “Every consumer has a right to be fully informed about the products they buy, and a right to not be charged for products they never asked for and do not want.”

Time Inc., the biggest U.S. magazine company and publisher of People and Entertainment Weekly magazines, said it already provided clearer disclosure of automatic renewal subscriptions.

Some Time Inc. magazine subscribers said they believed billing notices were outstanding bills and not renewal notices.

More than 108,000 U.S. consumers who received “invoice-like” renewal notices and bills between 1998 and May 2004 were eligible to be compensated, officials said.