Publishers Clearing House Settles Suits

For years now, letters from Publishers Clearing House have arrived in mailboxes nationwide with what looked like checks for large amounts and enthusiastic congratulations — “You are a winner!”

But officials in two dozen states and the District of Columbia say that consumers have really been the losers, and announced an $18 million settlement with the direct marketer to curb its allegedly deceptive sweepstakes promotions.

Tuesday’s settlement, stemming from lawsuits and investigations launched by the states over the past two years, calls on Publishers Clearing House to change many of its practices and provides money to reimburse some consumers.

The money will go to the states to reimburse customers who spent at least $2,500 with PCH between 1997 and 1999, the years during which investigations took place.

Starting to Correct the Wrong “We believe that this agreement will help put an end to to the horror stories of consumers, especially seniors, buying thousands of dollars in magazine subscriptions that they don’t need and can’t afford in the mistaken belief it will help them win a grand prize,” said Attorney General Eliot Spitzer of New York, one of four states that lead the push for a settlement.

Washington State Attorney General Christine Gregoire agreed, saying pitches from Publishers Clearing House and other direct marketers lure people in by giving them false hope.

“Hopefully, the settlement we’ve reached today will bring an end to a practice that has left too many citizens nearly penniless and their families devastated,” Gregoire said.

Attorneys general in California and Ohio also played active roles in negotiating the settlement.

Clear-cut Rules The settlement with the states imposes a number of conditions on Publishers Clearing House, which sells magazine subscriptions and collectibles by mail. Consumers have never been required to make such purchases to win one of the company’s giveaways or to improve their chances of doing so.

But the pact with the state officials is designed to make that clearer. The company will now be prohibited from using “winner” proclamations, sending simulated checks or requesting information from consumers such as asking when they’ll be home that would lead them to believe they had won a prize.

The mailings must also contain a conspicuous “Sweepstakes Fact Box” offering information about the odds of winning and the end-date of giveaways, and disclaimers telling consumers that buying something won’t help them win.

The Port Washington, N.Y.-based company also agreed to maintain a list of people who do not want to receive its mailings and to contact its most active customers by mail and telephone to ensure they understand the promotions and are not under financial duress.

Executives for Publishers Clearing House embraced the agreement even as they defended past practices.

“We believe our mailings have always been clear to our many customers. Nevertheless prolonged litigation is very expensive,” PCH senior vice president Bill Low said. “We needed to resolve this matter and we have, going the extra mile by agreeing to pay for consumer restitution and education and by adopting high standards that will make our advertising even clearer for the public.”

Low said he expected the settlement will pave the way for similar agreements with other states not part of Tuesday’s agreement.

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