Attorneys General Clamp Down on Orbital’s Deceptive Marketing Campaign

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April 2, 2015

deceptive-marketingThis week, attorneys general from across the country filed suit, as part of a coordinated effort against an Oregon company for deceptive magazine and newspaper solicitation practices. The top prosecutors accuse Liberty Publisher Services, Orbital Publishing Group (“Orbital”) and their principals, of overcharging consumers for subscriptions to newspapers, magazines and other periodicals.

What kinds of marketing practices sparked such a widespread and coordinated crackdown by some of the nation’s top law enforcement officials?

The accusations detail a fascinating scheme in which the companies mailed magazine and newspaper subscription notices, without permission from the publishers, to millions of consumers across the country. The solicitations were sent mostly to elderly consumers, were designed to look like publisher invoices, and indicated that recipients were receiving subscriptions at the lowest possible price, despite actually offering rates significantly higher than the publisher’s rates. The attorneys general allege that once consumers sent payment to the companies, the orders were processed with the publisher to ensure that each consumer’s subscription either began or was renewed, but that the companies ultimately retained the difference between the publisher rate and their deceptively inflated price. New York’s Attorney General is seeking the cessation of the alleged business practices, the return of money to consumers, and disgorgement of any profits generated from the subterfuge.

The scheme has affected not only individual consumers, but some of the most well-known publications in the country, including The New York Times, The Wall Street Journal and Consumer Reports. Each of these periodicals has taken measures to ensure that Orbital’s ruse does not damage their respective reputations. The Wall Street Journal has since offered free one-year subscriptions to affected customers.

Best Practices to Avoid a Deceptive Marketing Lawsuit

As we have previously written, state attorneys general and federal authorities have been increasingly aggressive in investigating and prosecuting companies for deceptive advertising and marketing practices. We have also written about the unique challenges presented by a lawsuit initiated by a state attorney general. Though Orbital may have been focused on more sinister motivations than the typical marketer, the coordinated effort by various attorneys general here only serves to reinforce the fact that it is ever important to make terms and conditions clear, conspicuous and accurate when transmitting solicitations. Marketers continually face a wide range of legal risks. Therefore, before undertaking a campaign, it is imperative to engage knowledgeable counsel to ensure that your marketing practices and procedures are fully compliant with all applicable laws and regulations.
If you are interested in learning more about this topic, need to review your marketing practices and procedures or if you are facing an investigation from a state attorney general or other regulatory agency, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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David O. Klein

David O. Klein

David Klein is one of the most recognized attorneys in the telemarketing, technology, Internet marketing, sweepstakes and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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