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Controlling Rogue Subscription Agents



By FOLIO: Staff
03/28/2006

"Cutting off one rogue seller is like putting a band aid on a staff infection."
Bridget Wells, Managing Member, The Subscription Source.

Rogue agents--transient subscription sellers offering cut-rate and unauthorized subscriptions far below legitimate offers--are a perennial problem and one that the broad reach of the Internet has only exacerbated. Yet while circulators and their subscription agents, who are already seeding lists and monitoring orders, are generally able to find offending sellers, the difficult next step is taking them to court.

One of the difficulties with rogue agents, aside from the revenue they siphon off the industry by selling a subscription at $5 and remitting $1 back to the parent agency, lies in tracking them down. Becoming one is easy. "You can write to any known sub-agency and say ムHi, can you give me a price list and a remit schedule?' and set up your own agency whether you want to go online or door-to-door," says David Rock, vice president, circulation, at Ziff Davis.

Rock sets up bogus orders to track illegal agents through the channel. "It's as easy as a Google search," he says. "I do a search and use a credit card to push orders through bad sub agents all the time." Rock seeds the order with a unique name to more easily track it and keep an eye on the process. "[Primary] agents can isolate the order and figure out where it came in from and pursue some sort of legal action."

Current numbers, according to Bridget Wells, formerly Hearst's director of partnership marketing, agency and ABC services, and currently managing member, The Subscription Source, indicate that there are thousands of sellers out there. Most are not directly authorized, and some do not work with an authorized clearing agent. And despite the efforts Rock describes, illegal agents often pick up and move their operations, whether a Web site or Post Office box, in the weeks that it takes to wait for an order to make its way through the system.

Rock has also scaled back the agency business Ziff Davis does;particularly with cash-field agents, a classification of sub-agent. "We scaled back mainly because we felt that we wanted to limit our exposure to the next circ scandal. It's very hard to always know what the agents are up to and we felt that limiting the number we deal with would help us maintain good sub files," he says. Rock eliminated 90 percent of the cash-field agents he did business with and now feels confident that there are no orders on his files that have originated with a rogue agent. Just to make sure, Rock has his team run through a bogus order on a bad offer every few months to double check.

Keep an Eye on Your Lists

One circulator at a major consumer magazine, who requested to remain an undisclosed source due to pending legal activity, recommends careful screening of list orders. Rogue agents have become particularly savvy in this area, often bold enough to assume the identity of a legitimate company to gain access to subscriber files.

There are, however, red flags that pop up when fraudulent list orders come in. Illegal sellers, uninterested in mailing to anyone but magazine subscribers, have an inherent attraction to magazine lists. "I test every new mailer," says the source. "The key is who is the mailer? What other lists are they renting? If they're only renting publishing files, that's a red flag."

Monitor Customer Complaints

Customers will often recognize phony sub or renewal offers, especially when a legitimate renewal bill follows a phony one that the customer already paid. Make your fulfillment house and customer-service team aware that you're interested in seeing any complaints linked to phony subscription-related mailings. Isolate these complaints and contact the customer directly to examine any previous or upcoming correspondence.

Renewal offers are where the real revenue impact is, says Dawn Russo, founder of consulting firm Subscription Integrity Services. "That's where publishers are losing revenue," she adds. "Agents are jumping on the renewals before the publishers are getting them."

Monitoring Is Good, Butナ

Taking legal action is the real issue. "Publishers are doing what they can do," says Wells. "Tracking is not the problem. You have to take action. And that's the problem. Publishers don't have the wherewithal."

Action, according to Wells, goes beyond simply denying an agent your business. "Cutting off one rogue seller is like putting a band aid on a staff infection," she says.

Corporate attorneys, adds Wells, will likely tell a circulator that yes, it's a problem for you, but as long as the customer is getting the product then it's not a problem for anyone else. And, thanks to prohibitive anti-trust laws that agents can turn against the publisher who attempts to prosecute them, attorneys will take a pass, saying it's not worth the effort.

Wells has proposed the formation of a watchdog organization comprised of publisher and agency representatives who will not only help publishers monitor fraudulent and unauthorized orders, but write the cease and desist letters and even handle taking legal action. "I need to hear from more publishers and agents," she says. "I also need to find a couple of legal eagles who know the laws and can provide advice and counsel."

By FOLIO: Staff
03/28/2006







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