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.

Beware of telemarketers who sell expensive magazine subscriptions

Carter Foster, an associate pastor at a Texas church for 25 years, says he can’t remember ordering the magazine subscriptions by phone. He can’t remember receiving a confirmation letter either.

All he remembers is that bills started coming for a handful of magazines, totaling $1,500. When he called to protest, he found out he had purchased five-year subscriptions.

“I can’t believe I did such a thing,” he says.

“They wouldn’t let me cancel. I told them that I just couldn’t believe it. Pay that much for magazines? For five years of magazines?”

His wife, Ann, called one of the magazines and learned that he had purchased the subscriptions from Heartland Inc., an Iowa-based telemarketing company that sells magazines by phone.

Dave Lieber reports on phone solicitors who sell magazine subscriptions.

They protested the charges with their credit card company but were told the purchases were legitimate and wouldn’t be reversed.

The minister at Metroplex Covenant Church said he has prayed about it, but he can’t remember making the purchases.

“I just ask that they treat me fairly,” he says. “I can’t imagine doing this. That’s an enormous amount of money to pay for magazines.”

The Watchdog contacted Heartland. Company lawyer Allison Steuterman received permission from Foster to release to me the recordings of two of his conversations with the telemarketers.

In the first recording, a man asks if he agrees to subscribe to the magazines. Foster answers in a soft voice, “OK,” to the man’s questions.

But the salesman speaks so fast to the 67-year-old Foster that even after listening to the tape six times, I still can’t understand what he’s saying.

He rattles off the magazines’ names so fast, I can’t tell what they are. The salesman ends by saying, “The easiest way to remember our company name is, ‘We’re Heartland and we love you,’ OK?”

“OK,” Foster replies.

After Foster listened to the recordings, he wrote to me: “It sounds like me, and the information I gave was correct. 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.”

After listening to the tapes, Steuterman, the company lawyer, pronounced her verdict: “The sales are authorized, and the payments on the credit cards are authorized. Heartland Inc. employees identify Heartland, the magazines, the cost, the number to call for questions and the cancellation policy. Heartland Inc. complies with all federal laws.”

The Iowa Better Business Bureau gives Heartland a C-minus rating with 363 complaints in the last three years. All have been resolved or closed. Steuterman said the company works diligently with outside agencies to handle complaints.

Iowa Attorney General Tom Miller warns on his Web site that problems with magazine subscriptions ranked second for total number of complaints received last year by the Consumer Protection Division. While some amounted to simple mistakes, others involved illegal tactics by questionable telemarketing companies.

“Here are some typical problems,” the Web site states. “Telemarketers who trick you into paying hundreds of dollars for multi-year 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.”

The Heartland lawyer told me that the company faced legal problems in three states over its selling practices — Kansas, North Dakota and Indiana — but that those problems were resolved.

As for people who buy magazines over the telephone, the lawyer advises: Pay attention.

Sometimes, “people listen with half an ear to what they’re doing,” she says. “They may be watching television at the same time they’re talking to one of our sales representatives.

“That’s why we send out the confirmation letter and give them the right to cancel. Sometimes people believe that they have discretionary income that perhaps they do not. A month or two down the line they wish they hadn’t made the purchase.

“Now I understand that, but at the same time, they have made the purchase. It’s an authorized purchase, but then they turn around and point the finger at Heartland, who actually goes out of their way to work with customers to make them happy.”

The company budged a little in Foster’s case.

“They said that if I paid off the remainder of the fees I would get a 10 percent discount,” Foster said. “I did that in order to stop any further contact with Heartland. I had several tense conversations and then decided to politely end negotiations with Heartland Inc. It still makes me sick to think that I would pay over $1,500 for magazines.”

The Watchdog saw one more play for Foster to get his money back. Heartland attorney Steuterman offered a clue when she wrote to me, “Heartland, Inc. has received no notice that he has complained to the Attorney General (Iowa or Texas), the BBB, or any other agency.”

Since we know that Heartland works to resolve its BBB complaints, Foster could file complaints with both the Iowa and Texas attorneys general, the Iowa BBB and the Federal Trade Commission. He could include a doctor’s note that attests to side effects of the medication he is taking for Parkinson’s. He can ask for a refund of all magazines not yet delivered.

After I called Heartland this week, the company called him again. But not to settle. It was another sales call.

“Since I paid off my credit on the magazines, I was in a premier position, and they tried to sell me more magazines,” he said. “I told them I was very unhappy and wasn’t interested in more purchases. They apologized and hung up.”

He asked to be removed from their call list. (Also, to stop telemarketing calls, he should verify that he is correctly listed on the state and federal Do Not Call lists.)

The other day, Foster got a phone call he wanted from Heartland. Steuterman offered a settlement: Foster pays for magazines already received and he gets reimbursed for the remainder. For that, he agrees not to sue or demand more money. The two parties are now trying to reach agreement.

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