Misleading tactics in the sale of magazine subscriptions is an illegal practice the FTC has challenged in numerous cases. But an action just filed by the FTC and the State of Florida focuses on a new audience allegedly targeted for deception: the families of people who are incarcerated and inmates themselves. The pending case also suggests compliance reminders that apply to companies in just about any industry.
Inmate Magazine Service and owner Roy Snowden sold subscriptions to popular news, sports, and hobby magazines to people serving prison sentences. In addition to advertising to inmates, the defendants targeted family members who wanted to send reading material to loved ones serving time. The company offered magazines in “bundles,” charging a set subscription fee plus a “handling charge” of up to $7.99. Consumers were required to pay the defendants the full amount upfront.
According to the FTC and State of Florida, in many cases, the defendants pocketed the payments, but the magazines never arrived or were delivered far later than promised, with no notification to the consumers and no chance for them to cancel their orders and get a refund as required by the FTC’s Mail, Internet, or Telephone Order Merchandise Rule.
Missing merchandise was only the first headache buyers faced. When consumers tried to complain, the lawsuit alleges they were met with a series of roadblocks and dead ends that made it nearly impossible to ask the defendants about the status of an order or to request a refund. For example, according to the complaint, the defendants’ “customer service” line offered customer service in name only. The line was rarely monitored and didn’t accept voicemail messages. And although the defendants’ website offered a form for customers to complete, it included a notice that people were allowed to submit only one inquiry every 30 days. (Of course, many inmates don’t have access to the Internet and therefore couldn’t complete an online request for assistance.)
When consumers finally complained to advocacy groups and law enforcement agencies, the FTC and State of Florida say the defendants claimed they had sent the subscription requests to the magazine publishers and couldn’t track them. But at least one person who contacted a magazine publisher directly was told that the publisher had no record of the company’s purported order – and indeed had no relationship with the company at all.
The complaint alleges violations of the FTC Act, the Mail Order Rule, and the Florida Deceptive and Unfair Trade Practices Act.
The federal court has temporarily halted the operations of the company. Even at this early stage, the case suggests two reminders for other companies.
Consider a Mail Order Rule compliance check at your company. If you think you’ve observed an uptick in Mail Order Rule enforcement, you’re right. Online commerce, subscription services, and other forms of “socially distanced” retailing depend on consumers’ confidence that companies will ship merchandise in a timely fashion – or will contact them about delays and offer the option to cancel. For legitimate companies that want to do right by their customers, the Business Guide to the FTC's Mail, Internet, or Telephone Order Merchandise Rule walks them through the steps to take to honor their shipping promises and address unanticipated supply glitches.
Put the service back in “customer service.” Giving consumers the customer service run-around is a sure-fire way to turn a simmering concern into a full boil. Companies interested in repeat business understand the value of responding promptly to consumer inquiries and using the experience of unhappy customers to correct questionable procedures and practices.
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