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Monday, 5 March 2001
Page: 24945

Mrs GALLUS (Parliamentary Secretary to the Minister for Reconciliation and Aboriginal and Torres Strait Islander Affairs) (4:38 PM) —Today I want to grieve about the marketing technique of Readers Digest. Several weeks ago, I was contacted by a relative of one of my elderly constituents, concerned that his elderly relative had a debt to Readers Digest of over $900. The gentleman in question is over 90 and had been a customer of Readers Digest for many years. Rather than appreciate their good customer, Readers Digest took advantage. My constituent received countless offers that implied that he was about to win a prize when in fact, as we all know, the likelihood of that was extremely small. Lured on by these enticements—and maybe my constituent was not as acute mentally as he once was—my constituent proceeded to purchase the offerings and ended up with this considerable debt. He then received correspondence from the Readers Digest debt collection agency demanding payment. At the same time that he was receiving these debt notices, Readers Digest was still sending him letters urging him to buy more products and implying that a cash prize was just a purchase away. I would like to read from that correspondence that Readers Digest was sending to my constituent. Of course, I will change the name; it will not be my constituent's actual name. The letter says:



... ... ...

... you have made at least [300] purchases—

I have changed the number, and my number is actually smaller than the number of books quoted in the letter—

one of your most recent being Great Expectations, which has been duly recorded. Further, it has been determined that your name has not yet appeared on our Winners List.

As a result, the Committee is of the unanimous opinion that you, Mr [Doe], be recognised for your excellent customer standing and be fully compensated with opportunities to become a Reader's Digest prize winner. Consequently, the Committee has recommended that Mr [Doe] be nominated to have an opportunity to win the sum of not less than $70,000 CASH. ...

To process your nomination for the Thank You Prize you could win in a customers-only draw when you say `YES' to THE COMPLETE WIND IN THE WILLOWS—

may I suggest that a gentleman over 90 might already have read The Wind in the Willows

you have been issued the enclosed Prize Claim Certification. ... Upon completion and return as directed, this Certification shall confirm Thank You Prize eligibility for Mr [Doe]. ...

This Thank You Prize has received full approval from all governing authorities charged with the dispensation and awarding of prize monies offered herein. ...

In closing, I wish to extend my sincerest congratulations on your Thank You Prize nomination. On behalf of the entire Commission, thank you for your continued interest in Reader's Digest products. And thank you in advance for saying “YES” to THE COMPLETE WIND IN THE WILLOWS.

How many elderly people and people in quite probably dire circumstances get sucked in by this sort of marketing, which implies that there is a prize: `Just ask for one more book and that prize will be yours!' Indeed, I have it from the relative of my constituent that that is exactly what this elderly man thought. He was checking the mail every day to see if his prize had arrived, and I think that giving a false impression is totally unscrupulous. I have read to you what he was being sent inducing him to buy; at the same time, he was receiving from Readers Digest a final notice, `FINAL NOTICE' being in capitals:

We are disappointed you have not settled your account with Reader's Digest.

Failure by you to rectify this situation NOW will leave us no alternative other than to authorise action for recovery of the debt.

Details will be passed to our DEBT RECOVERY DEPARTMENT.

If you wish to avoid the embarrassment of such action


Elderly people—unlike some of us, who get a bit used to some of these techniques—take these threats of debt collection very seriously. To them it is an absolute disgrace to be in debt, and they worry if they have not got the money to pay that debt; and this is what is happening to this particular gentleman. I can only deplore the methods that Readers Digest uses to induce people who perhaps do not know better to buy things that, I suspect, in many cases they do not want and do not need. Frankly, I believe that Readers Digest promotional activities border on the unscrupulous.

I am using this statement in the grievance debate to warn my other constituents so that they do not fall into a similar trap. Hopefully, this statement today will give them a more realistic appreciation of the type of marketing that Readers Digest sinks to. What was most concerning about this whole episode is that, while my constituent was receiving letters urging him to buy more products, he was at the same time receiving intimidating notices from the Readers Digest debt collection agency.

I have looked through all the clippings in regard to Readers Digest and I have found that they have been boasting that over the last years they have been increasing their already considerable profit, which I believe is in the area of $260 million in one country alone. They are increasing it by powering up their marketing methods. We in this country have to warn our consumers. I will be writing to the appropriate ministers, asking what we can do about this. I will be writing especially to the minister sitting at the table, the minister responsible for consumer affairs, the Minister for Financial Services and Regulation, Mr Joe Hockey, asking him what we can do in Australia to protect people from this type of unscrupulous marketing.