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Sweepstakes 'winners' complain about charges from National Magazine Exchange

Randall Benesch is one of hundreds of consumers complaining about National Magazine Exchange in Largo. Benesch, of Kenneth City, says he didn’t get the vacation or gift card he was promised.

KATHLEEN FLYNN | Times

Randall Benesch is one of hundreds of consumers complaining about National Magazine Exchange in Largo. Benesch, of Kenneth City, says he didn’t get the vacation or gift card he was promised.

First come the mailings — about a million every week.

We have been trying to reach you regarding your $2,100,000.00 sweepstakes. . . . Please call us at the above number. This is a free call.

The 3- by 6-inch postcards typically land in mailboxes of people who have previously bought magazines or registered for sweepstakes, like Kenneth City resident Randall Benesch and Carl Grenier of Lowell, Mass.

The postcards entice consumers to call an 800 number in hope of winning big cash prizes, like the $2.1 million a New York woman is said to have pocketed in June.

Most consumers won't win a dime. But a call to the Largo-based National Magazine Exchange, known as the NME, or its affiliates could cost them a bundle.

"They really socked my credit card," said Grenier, who says he was hit for $1,000 worth of magazine subscriptions. "They billed me for a five-year subscription when they never told me it was even one year."

Grenier and Benesch complained to the Pinellas County Department of Justice and Consumer Services. They joined 589 other consumers who, over the past five years, have complained to that agency, the Better Business Bureau of West Florida Inc. in Clearwater or to the state Attorney General's Office.

The complaints come from less than 1 percent of the thousands of people who phone the company's call center every week, said Julie Christman, marketing director for National Magazine Exchange and its affiliate ThinkDirect Marketing Inc.

"Over the past three years, we have had approximately 14 million entrants into our sweepstakes, sold over 1 million subscriptions, and awarded $4.35 million in sweepstakes prizes," said Christman, whose more than 750-worker company ranks among the top 25 in Pinellas County in terms of employees.

"As always, NME will continue to focus on customer satisfaction, and we are proud of our overall record," she said.

But that record includes:

• An ongoing investigation by the state Attorney General's Office of the 175 complaints the agency has received from consumers and employees about NME's sales tactics and employment practices.

• Almost 400 complaints to the Better Business Bureau over the past 36 months involving allegations of high-pressure sales tactics, failure to deliver products requested and trouble canceling sales.

• More than two dozen complaints to the Pinellas County Department of Justice and Consumer Services with similar allegations.

• A class-action lawsuit filed against NME last year in U.S. District Court in Tampa. It includes more than 250 current and former employees who say the company docked their pay when they were away from their computers for more than 30 seconds. (See story below.)

• A $535,000 fine paid in 2004 after the Federal Trade Commission accused the company of "engaging in unfair or deceptive acts or practices."

• $30,000 in fines levied against the company in 2001 after attorneys general in Florida and Oregon cited the company for deceptive business practices.

Christman says the company does not discuss ongoing litigation, and previous problems were resolved when new chief executive officer Dennis A. Cahill took over in 2008.

The company says it works to minimize consumer unhappiness by restricting what call center workers can say to potential customers.

"We're a very highly script-written environment," said Harold W. Hale Jr., the company's chief financial officer. "It's 'stick to the script.' We don't tolerate deviation from the script."

• • •

Here's how it works:

Hale says the company mails postcards that prompt consumers to call for a chance to win a sweepstakes.

The 1 million pieces of marketing mail sent out each week yield about 150,000 responses to the call center at 8285 Bryan Dairy Road in Largo, Hale says. Callers are offered magazine subscriptions, DVDs or memberships in buying and discount clubs.

Of those 150,000 callers, Hale says, about 10 percent, or 15,000, make a purchase.

Consumer experts say use of the mail solicitations is a method telemarketers employ to get around the Do Not Call list. Instead of calling the consumer, the marketer persuades potential customers to call them.

• • •

Randall Benesch, the Kenneth City resident, said his sales person pushed him to buy magazine subscriptions even though he had no money.

"I told them I don't have any money to buy the magazines," Benesch said. "I just wanted to enter the contest."

But the sales person pressed him all the more, saying they could charge him later.

"They were going to give me a vacation somewhere, here in Florida somewhere," Benesch said. "I said, 'I don't have the money to do it with.' They said, 'You mean you don't want to go on a paid vacation?' "

Then they also offered him a $40 Walmart gift card.

But when he finally gave in to the pressure and gave his debit card information, the $68 charge did not go through.

"I didn't have any funds," Benesch said. And he didn't get his free vacation or Walmart card.

"I never received any of it," he said. "All of it to me was just a scheme."

• • •

Grenier says he never intended to buy magazines. He just wanted to see what he had won.

Grenier was hit with more than $1,000 in credit card charges for what he thought was a trial offer of magazines. It turned out that the company charged his credit card for 12 magazine subscriptions with five years' worth of renewals.

After Grenier complained, the company refused to refund his money. "Basically, they told me to go to hell. . . . I'm not a rich man, you know what I mean?"

Grenier contacted the Pinellas County Department of Justice and Consumer Services to file a complaint. His was a story all too familiar to the investigators.

"They wanted to cancel, and they were having problems doing that," said Deborah Berry of the Pinellas consumer protection agency.

Over the past three years, complaints from consumers in every state but Vermont have poured into Pinellas consumer protection and the Better Business Bureau of West Florida Inc., which handles national complaints about National Magazine Exchange.

"Consumers have complained that they were billed for magazine subscriptions that they didn't order," said John Zajac, a spokesman for the Better Business Bureau. "Additionally, we've received complaints about the company's sales practices, including misrepresentation and high-pressure phone calls."

• • •

NME announced plans in January to hire 350 new workers to help fill its expanded facilities in Largo. The expansion will bring the number of employees to about 1,100 workers in 100,000 square feet of space.

The company began in Largo under William Hood, a past president and director who incorporated the business in 1985 under the name Special Data Processing. Four years later, Hood incorporated National Magazine Exchange, operating the business under both names.

The company would run operations under several names, all tied to National Magazine Exchange, including Agora Marketing Solutions Inc., NME, National List Exchange, National Clearing Exchange, Clearinghouse Magazine, Strike It Rich 2 Sweepstakes and ThinkDirect Marketing Inc.

Though it set up operations similar to Publishers Clearing House, the companies are not related.

In April 1995, the company made its first public announcement about plans to expand its operations. Special Data Processing Inc., said it would move into a building near Tri-City Plaza in Clearwater and add 135 workers to its 700 existing employees.

Five years later, mounting complaints from consumers across the United States led to the first in a series of enforcement actions by federal and state authorities.

Christman says investigations or issues raised by consumer watchdogs are a thing of the past.

"We are eager and happy to work with the Better Business Bureau and other consumer organizations to discuss how we do business, and resolve any and all complaints we receive," Christman said.

Benesch said he wishes the company responded to him with that level of concern.

"I think the attorney general of the state of Florida ought to look into all of this," Benesch said. "I learned a big lesson from all of this."

Times researcher Shirl Kennedy contributed to this report. Ivan Penn can be reached at ipenn@sptimes.com or (727) 892-2332. Follow him on Twitter at twitter.com/Consumers_Edge and find the Consumer's Edge on Facebook.

Sweepstakes 'winners' complain about charges from National Magazine Exchange 02/25/11 [Last modified: Saturday, February 26, 2011 8:55pm]

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