Scholastic to Pay $710,000 in Negative-Option CaseScholastic Inc. agreed yesterday to pay $710,000 to settle a federal complaint that it violated negative-option marketing laws with promotions for its book clubs, the Federal Trade Commission said.
The FTC complaint involved two Scholastic subsidiaries: Grolier Inc., which Scholastic purchased in 2000; and Scholastic-at-Home, which handles billing, collections and customer service. The complaint alleged that Scholastic's direct mail and telemarketing campaigns for its book clubs failed to give consumers adequate information and resulted in consumers complaining that they received books they didn't order.
According to the FTC, consumers first enrolled in a Scholastic book club that let consumers preview two books for free. If consumers kept the books beyond a trial period and paid for them, Scholastic automatically enrolled them into a club that shipped books to consumers monthly and required them to buy a minimum of four, the FTC said.
If consumers made two purchases, Scholastic automatically enrolled them in a second club, the FTC said. This club sent consumers notices three or four times yearly informing them that it would send them additional books unless they returned the notice marked "cancel," according to the FTC.
Scholastic's direct mail and telemarketing solicitations failed to distinguish between the two clubs or inform consumers of their obligations under each club, such as their obligation to return the notice, the FTC said.
Scott Hovanyetz covers telemarketing, production and printing and direct response TV marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters