Rules & Resources
Consumer Magazine Support Center

Club/Membership Program Approval and Audit Requirements

Club/Membership is defined as a group of individuals who belong to an organization for a common purpose, wherein the “club” either meets regularly; provides an outlet for members to use; or has ongoing communications with the members on the “common purpose” subject.

Club/Membership subscriptions may be structured so that the magazine subscription and the related value of the magazine are presented as either non-deductible or deductible from dues paid by the consumer.

Rule F 2.7 Club/Membership Subscriptions governs the requirements for subscriptions that are part of the dues or membership fee of a club program.

Organizations meeting postal and federal/state tax rules for a non-profit entity governed by a board of directors serving on a voluntary basis should be evaluated under association subscriptions, Rule F 2.4 Association, Organization, and Society Subscriptions.

Non-Deductible Club/Membership Subscriptions Qualification

Nondeductible club/membership subscriptions will qualify for inclusion in paid circulation under the following conditions:

  1. The publication included in the club/membership program must be editorially homogeneous with the defining characteristics of the club or membership program.
  2. Annual club/membership dues must be collected from the club/membership members.
  3. Club/membership members shall have the option to "opt" out of the club/membership program, but may continue as subscribers at the same or greater price as allocated as part of the membership fee.
  4. The amount to be allocated to the subscription must be at not less than one cent, and the value of tangible products or services (premiums) plus the amount allocated for the subscription cannot exceed the amount charged as dues.
  5. The explanatory paragraph of ABC Publisher's Statements shall include a full description of the club, to include a listing of all club benefits and, where applicable, the value of club benefits.
Sales generated from non-deductible club/membership programs must be excluded from the average price calculation. This exclusion must be noted in the average price paragraph.


Deductible Club/Membership Subscriptions Qualification

Deductible club/membership subscriptions will qualify for inclusion in paid under the following conditions:

  1. Publications included in the club/membership program must remain editorially consistent with the defining characteristics of the program.
  2. Annual dues must be collected from members of the club/membership program
  3. Club members must be notified that a potion of their dues or payment includes a subscription to the publication
  4. The amount allocated for the subscription must be at least one cent.
  5. The amount allocated to the subscription and deductible from membership is the amount recognized as the subscription price, and for average price reporting.
  6. The member may decline the subscription and deduct the value of the subscription from the club’s membership dues or through a refund approach directly from the publication.
  7. Clear and simple instructions on how to process the refund (should require minimal effort by the member)

Audit Standards and Requirements

ABC has developed the following standards for qualifying club/membership sales as “paid circulation” on ABC consumer magazine reports. The accompanying audit requirements are designed to verify ABC publisher member claims against these standards.

Three basic elements are required to report the either deductible or non-deductible club/membership sales as “paid circulation”:

  1. Confirmation that the consumer was notified of the inclusion of the magazine as a benefit of membership and the value assigned to the magazine as included in the dues.
  2. For deductible club/membership programs, verification that customer has been given clear and reasonable information on how to obtain a refund instead of receiving the magazine
  3. Verification that the customer represented actually paid dues required for belonging to the club/membership.
ABC’s publisher relations staff is available to assist ABC members as they develop club/membership programs and to provide consistent interpretations of ABC club/membership rules and standards.

ABC Publisher Relations Staff:

847.879.8285
847-879-8388
847-879-8371

What follows is an outline of both the documentation that will be required and the applicable audit procedures. ABC strongly encourages publishers to have their programs pre-approved to assure that the circulation generated through these programs qualifies as “paid” circulation and that records exist to assure a smooth, efficient audit.

Required for a Classification Review

A complete description of the club program, including information regarding the benefits of the club, the manner in which the club is promoted and membership/enrollment materials used to sell the club package.

Required for Pre-qualification Review

  • Examples of consumer notification regarding:
    • The inclusion of the magazine in the club
    • The consumer’s option to decline the magazine (if deductible club)
    • The refund process (if deductible club)
  • A description of the documentation that will be available to the ABC auditor to confirm enrollment and payment of dues for the club.
  • The following program elements may not be resolved when the pre-qualification review process is initiated. Once completed, they should be communicated to ABC as soon as possible:
    • If multiple publications will be offered, a list of those publications.
    • The planned launch date and duration of each program.
    • Summary of the participation agreement between the publisher (or agent) and any secondary organization if applicable.

ABC Audit Test Guidelines for Club/Membership Sales

The following guidelines have been developed to address the audit risks specific to both deductible and non-deductible club/membership sales.

1) Subscriber Initiated Documents

a. Accompanied by “Proof of Payment”: When the consumer is required to complete a form to start the subscription, and the form is accompanied by a “proof of payment” annotation completed by the club organization, the ABC auditor will accept this document as verification of order and payment.
b. Not Accompanied by “Proof of Payment”: When the consumer is required to complete a form to start the subscription, but no “proof of payment” is submitted, the auditor may execute “negative” confirmations on selected samples to verify qualification.

(Examples of satisfactory “proof of payment” include, but are not limited to, membership registration forms with payment information such as credit card payment record or copy of check)

Supplemental test of cash may occur to confirm accuracy of payment information being provided by club organization.

2) Internet or Telephone Orders

a. Executed by a club having no financial interest in the publication. When the consumer deals directly with the club, through their internet site or telephone center, the auditor will accept statements from responsible management. These statements must verify the program details and attest to the volume of subscriptions/club memberships sold through the program. The auditor may supplement this process with either negative or positive confirmations.
b. Executed by a club in which the publisher or his/her subscription selling agent has financial interest in the club’s organization. The auditor will conduct negative or positive confirmations depending on specifics of the program.
c. Executed by publishers or agents. When the customer deals directly with the publisher or with subscription selling agents, the auditor will conduct positive confirmations to verify the transactions.

Negative Confirmation Process

In a “negative” confirmation, a sample of subscribers is contacted to verify the execution of the program. Subscribers will be asked to reply only if the details of the program, as understood by the ABC auditor, are incorrect. Negative confirmation test results are considered “discovery” by ABC and could lead to an expanded review of program documentation.

Prior to initiating negative confirmation, the ABC auditor will work with the publisher in the design of the communication and the plan to contact the subscribers.

Positive Confirmation Process

Positive confirmation tests require that a sample of subscribers confirm that the information requested by the ABC auditor is correct. In the event the subscriber indicates the information is incorrect, or does not respond, these sample names are considered “no good.” Of course, the publisher will have an opportunity to contact these subscribers to have the “no good” status of their subscriptions reversed.

Prior to initiating positive confirmation, the ABC auditor will work with the publisher in the design of the communication and the plan to contact the subscribers.

ABC stands ready to help publishers, at all stages of the process, understand rules, documentation requirements and the audit process. Please contact the ABC publisher relations staff as soon as possible to assure that your proposed program qualifies under ABC rules and will be audited smoothly and efficiently.



Posted 3/17/05