The Federal Trade Commission filed charges Tuesday against the operators of a large-scale scheme involving dozens of companies that allegedly bilked consumers using fake newspaper subscription notices.
According to the FTC's complaint, through a complicated and ever-changing web of companies, the defendants sent consumers fake "Notice of Renewal/New Order" mailers for subscriptions to newspapers such as The New York Times, The Wall Street Journal, The Seattle Times, The Denver Post and for various magazines.
Many consumers complained about the fake notices, paying an inflated price, delays in receiving publications they ordered or receiving the wrong publications. In some cases, consumers paid twice for the same subscription.
The FTC’s complaint names as defendants: Linda Babb; Shannon Bacon, also known as Shannon Balero and Shannon Gordon; Jeffrey Hoyal; Lori Hoyal; Colleen Kaylor; Laura Lovrien, also known as Laura Babb; Noel Parducci, also known as Noel Littlefield; Lydia Pugsley, also known as Lydia Babb; Dennis Simpson; and William Strickler.
More than 375 newspapers told the defendants to stop and many have placed alerts on their websites and/or in their publications to warn consumers. 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" – but that disclosure refers only to magazine subscriptions.
Consumers who learned the defendants did not represent their regular newspaper and tried to cancel payment or obtain refunds found it hard to reach customer service. Those who 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.
To attempt to circumvent publishers’ letters telling them to “cease and desist,” the defendants created shell corporations to process and submit orders. Some of them used the information consumers provided to complete newspaper subscription insert cards and forwarded the cards to publishers, paying the publishers’ normal subscription rate, not the full amount the defendants received from consumers.
The notices look like subscription notices from publishers, claim that consumers’ subscriptions would automatically renew if they paid, and that the price - "one of the lowest available rates" - is authorized by the publisher. In fact, the defendants do not have publishers’ authorization and charge up to 40% more than the newspapers typically charge.
The FTC seeks to stop the illegal operation and obtain money for return to consumers.