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Time Inc. agrees to pay $4.9 million for consumer refunds in settlement with 48 state attorneys general and DC Corporation Counsel

Thursday, August 24, 2000

Time Inc. agrees to pay $4.9 million for consumer refunds in settlement with 48 state attorneys general and DC Corporation Counsel

Corporation Counsel Robert R. Rigsby announced today that his office and 48 state attorneys general have reached a settlement agreement with Time Inc. that requires the company to change its sweepstakes mailings and to pay $4.9 million into a consumer restitution fund. The settlement, which includes the District of Columbia, Maryland and Virginia, resolves allegations that Time misled consumers in violation of consumer protection laws.

Time and its subsidiaries promote their magazines, books, and other products through sweepstakes offered under the "Guaranteed & Bonded" name and under the names of individual magazines. According to Rigsby, the company's mailings misled many consumers into believing that they were close to winning a large cash prize and that they could increase their chances of winning by ordering magazines or other merchandise.

Time has agreed in the future not to represent that a consumer may be the winner of a sweepstakes unless the conditions that apply are presented in type size that is no smaller than the type size used for the rest of the representation. The company has also agreed to provide in its sweepstakes mailings a statement of "SWEEPSTAKES FACTS" that will include the estimated odds of winning and the following consumer disclosures:

You Have Not Yet Won. All entries have the same chance of winning.
Entry is Free.
Enter As Often As You Like.
Buying Won't Help You Win.

In addition, Time has agreed to stop sending sweepstakes mailings to any customer who has spent $500 or more in response to Time's sweepstakes promotions during the preceding 12-month period.

The state attorneys general plan to use the $4.9 million consumer restitution fund to offer a full refund to each consumer in the 48 settling states and DC who spent at least $500 in response to Time's sweepstakes promotions during 1997-1999. A total of 6,731 customers are eligible for the refunds, including 36 in the District. Time will also be paying the states $3.2 million for their investigative and legal expenses, including $75,000 for the District government.

The Corporation Counsel's power to enforce the District of Columbia's consumer protection law was enhanced by legislation that went into effect on July 24. The Corporation Counsel received authority to seek civil penalties of up to $1,000 per violation and to subpoena witnesses and documents before filing suit. In addition, the legislation created a consumer protection revolving fund to help fund the Corporation Counsel's consumer protection work. The $75,000 payment that the District is to receive from Time will be credited to the revolving fund.

Copies of the settlement agreement and samples of the "Guaranteed & Bonded" mailings that Time sent to consumers in the District of Columbia are available from the Office of the Corporation Counsel.

Media Contact: Leigh A. Slaughter, Special Deputy Corporation Counsel, (202) 724-5198.