It has just been announced that the publisher of Time magazine agreed to pay nearly $4.5 million in refunds to 108,000 subscribers in 23 states who claimed that they were being charged for subscriptions they never ordered.
Between 1998 and 2004, Time required readers to cancel a subscription instead of giving readers an opportunity to renew. In doing this, Time charged people's credit cards for subscriptions they never ordered.
Time maintained that it did not violate any law or engage in misleading or deceptive conduct.
According to the settlement agreement, Time must identify its automatic renewal offer terms near where the customer selects billing or subscription options.
Marketing turned upside down
In marketing, if you have a renewable income such as a magazine, one of the most effective ways of increasing your profits is by using a "till-forbid" agreement.
Your client's credit card is automatically debited until they tell you to stop. This is critical for cash flow and profitability.
But now, because of this issue with Time magazine, whether or not the till-forbid method is safe has been called into question.
Unfortunately, this situation could have repercussions for all companies that use a till-forbid agreement.