The operators of dozens of companies has been charged by the FTC with deceiving consumers by using fake newspaper subscription notices. The commission wants to stop the operation and return the funds to consumers.
According to the complaint, the defendants send consumers “Notice of Renewal/New order” mailers, through a complicated web of companies, for subscriptions to newspapers such as The New York Times, The Wall Street Journal, The Seattle Times and The Denver Post, along with subscriptions for magazines. These notices claim that consumers’ subscriptions will automatically be renewed if they pay, and that the price is “one of the lowest available rates” that is authorized by the publishers.
The Federal Trade Commission alleges the defendants do not have authorization from the publishers and charge 40% more than the newspapers typically charge. The fine print on the back of these notices make a statement from the defendants that they “do not necessarily have a direct relationship with the publishers or publications” and that the disclosure only refers to magazine subscriptions.
There have been numerous complaints from consumers about the fake notices, paying inflated prices, delays in receiving publications they ordered, or receiving the wrong publications. In some cases, consumers paid twice for the same subscription.
Consumers who learned the defendants did not represent their regular newspaper and tried to cancel the payment or obtain refunds have found it hard to reach customer service. Those who successfully reached the defendants often received no refund or only a partial refund, or they succeeded only after complaining to the Better Business Bureau (BBB) 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 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.