I'm not sure that I'd call that a scam. Myself and several of my friends were legitimate customers and never had any issues.

If it were a scam, though, it certainly worked both ways. I worked for Columbia House as a teenager ("data entry"), entering in all those applications that people sent in. We received an absurd number of obviously bullshit applications (e.g.: "Mickey Mouse", "Donald Duck", etc.) -- sometimes one after another, all with the same address and handwriting -- but were told to enter them in anyways.