HARRISBURG, Pa. -- The publisher of Time magazine has agreed to pay nearly $4.5 million to end investigations by 23 states into whether it deceptively marketed and billed people for subscription renewals, Pennsylvania's attorney general said yesterday.
Time Inc. also agreed to make about $4.3 million available in refunds, Attorney General Tom Corbett said. About 108,000 customers in those states are eligible to share the refund money and will receive a mailing in three months with a refund request form.
The $4.5 million will cover the cost to states to investigate Time, which also publishes Fortune, People, Sports Illustrated, and more than 40 other magazines in the United States.
Between 1998 and May 2004, Time required readers to cancel a subscription if they no longer wanted it, instead of giving them the option to renew it when it was about to expire, Corbett said.
As a result, Time billed people or charged their credit cards for subscriptions they never ordered, Corbett said. In many cases, the automatic renewal notices resembled billing invoices, prompting people to pay them, sometimes out of fear of repercussion, he said.
''This deceptive or perceived scare tactic method to renew a magazine is at best unfair and at worst illegal," Corbett said.
Time, which is a division of Time Warner Inc., also agreed to stop using magazine renewal solicitations that resemble invoices, to stop using collection agents for unpaid bills of automatically renewed customers, and to refund people for magazines they did not order, Corbett said.
In a statement, Time said it has already changed some of its marketing and collection practices to clarify its automatic renewal of subscriptions. The company will mail a claim form marked ''refund offer enclosed" in June to people eligible for a refund.
The only New England state involved in the settlement is Maine. Other states include California, New York, New Jersey, and Texas.
Shares of Time Warner fell 9 cents, to close at $17.06 on the New York Stock Exchange.