Company that preyed on senior citizens forced to make restitution

How wonderful to see a company that preyed on senior citizens by selling high-priced magazine subscriptions get kicked out of its home state and forced to make refunds.

That’s what has happened to Heartland Inc., which last month agreed to leave its Urbandale, Iowa, headquarters after that state’s attorney general confronted the company for its sales tactics.

“Heartland is in the process of dissolving,” Allison Steuterman, a lawyer for the company, said in a brief telephone interview with The Fort Worth Star-Telegram’s Watchdog.

In March, Steuterman had assured me that everything at the company was on the up and up, but when I listened to recordings of phone calls with a longtime Hurst pastor who complained to The Watchdog, I could not agree. [Read our previous report “Beware of telemarketers who sell expensive magazine subscriptions.”]

The Heartland telemarketer spoke so fast to Carter Foster, rattling off the names of magazines, that I couldn’t understand what he was saying. Foster had the same problem, but he still agreed to the sale.

The salesman ended the conversation by saying, “The easiest way to remember our company name is, ‘We’re Heartland and we love you,’ OK?”

When Foster received the bills, he was shocked. The total was about $1,500. When he called to protest, he found out he had bought five-year subscriptions. At first, he tried to cancel, but the company wouldn’t let him.

After Foster listened to the recording of his calls, he told me: “As I listen to the recordings, I feel deeply heartsick. I have Parkinson’s, and the medication I was taking left me less than alert.”

Iowa Attorney General Tom Miller says that consumers, many of them on the National Do Not Call Registry, received calls from Heartland employees pretending to be their current magazine vendor. The callers misled the customers into supplying personal and financial information and assuming new payment obligations, according to Miller.

Heartland was not directly tied to the magazines it sold, and sometimes customers didn’t realize that.

In March, the company had 363 complaints in three years listed with the Iowa Better Business Bureau. When I rechecked this week, it had 443.

Now there should be none.

Under its voluntary agreement with the Iowa attorney general, Heartland leaves Iowa for good. Any former customers with complaints that predate September can contact the company and the Iowa attorney general and get a refund. That applies to residents throughout the United States.

Bill Brauch, director of the consumer protection division in Miller’s office, said that the company must make full restitution to complaining customers and that if the company refuses, Heartland must explain why to the Iowa attorney general in writing. Any violations could result in a $40,000 fine for each occurrence.

Two of Heartland’s principals, Theresa “Teri” Kruse and Chris Myers, are taking their successor company, PCCS Llc., to another state to do business, the agreement states.

The Heartland lawyer declined to tell me what state that is. When I asked to interview company owner Kruse, the lawyer told me, “I’m certainly not going to give you her telephone number.”

I called the company for further information. An employee promised that someone would call back, but nobody did.

Before its problems with Iowa, Heartland also had issues with authorities in Kansas, North Dakota and Indiana. In Texas, a spokesman for Attorney General Greg Abbott says the company has drawn four complaints in the past two years.

Brauch said aggressive magazine selling by secondary vendors such as Heartland is a national problem, especially when they target the elderly. He vowed to let other states know about Heartland’s problems and alert them to the replacement company, PCCS, as it sets up shop elsewhere.

Before Iowa’s enforcement action was announced, its attorney general placed a warning on its website listing problems with secondary magazine vendors.

Problems include “telemarketers who trick you into paying hundreds of dollars for multi-year magazine subscriptions to magazines you don’t want or can’t afford … so-called sweepstakes that sign you up for a subscription without your approval … solicitations for magazines at ‘pennies a day for shipping and handling’ that turn out to be very expensive … and ‘special promotions’ for ‘free issues’ that actually sign you up for costly subscriptions that are difficult to cancel.”

After Foster, the Hurst pastor, contacted The Watchdog, Heartland changed its mind about giving him a refund. This week, he informed me that he received a check for about $1,500 from the company.

He declined to comment further because he said part of the agreement he signed with Heartland was that he would not talk about his troubles with the company.

“I feel obligated to that,” he told me, adding that he is pleased with the outcome.

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Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber

Dave Lieber book that won two national awards for social change.