Reader’s Digest Settles Schools’ Suit

Reader’s Digest has agreed to pay $40 million to settle claims its subsidiary bilked schools out of millions of dollars by not paying them as much as it promised for sales of magazine subscriptions.

Under the deal announced Tuesday, more than 20,000 schools that used QSP Inc. in their fund-raising from 1990 to 1995 will receive between $80 and $4,000 each. Reader’s Digest denied any wrongdoing.

The lawsuit contended that QSP had promised the schools a profit of 40 percent from the sale of magazines. But QSP schools actually earned between 27 percent and 33 percent because they were forced to pay for incentive prizes, said Frederic Gordon, an attorney for the schools.