PCH Offers Refunds to Settle Class-Action

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Stampsheet marketer Publishers Clearing House, Port Washington, NY, agreed to enter into a nationwide class action settlement late last month to resolve a civil litigation pending against the company.


The lawsuit, which was filed by Thomas G. Vollmer of Illinois and nine other consumers February 1998, is pending in the U.S. District Court for the Southern District of Illinois. The claimants said PCH duped them into buying magazines and books by making them believe this would increase their chances of winning an $11 million sweepstakes.


The proposed settlement, preliminarily approved by U.S. District Judge G. Patrick Murphy, said PCH is required to send copies of the settlement to the 40 million to 45 million households who have purchased something from PCH between 1992 and June 30, 1999. The mailing had to be completed by Sept. 3, and PCH has finished the process.


The settlement also requires PCH to offer those who subscribed to magazines or bought merchandise during this time period to enhance their chances of winning the sweepstakes the opportunity to cancel their subscriptions and merchandise orders and get refunds. To obtain a refund, mailers must provide PCH with a notice of rescission postmarked by Oct. 18 and received by PCH no later than Nov. 2.


The settlement also calls for a $10 million fund. About $1.5 million of the fund goes to mailing and administrative costs, $3 million goes to fees and expenses of legal services and $5.5 million goes to paying claimants.


Consumers are paying attention to the mailing. "We've received about 2,000 or 3,000 letters per day about the direct mailing that we are trying to respond to," said Douglas Sprong, the class action attorney with law firm Carr, Korein, Belleville, IL. "People have questions about how to mail their claim form out, and we are going to be mailing out a sample claim form to help them along."


In addition, the proposed settlement offers sweepstakes entrants at least three automatic entries in future sweepstakes.


Bill Low, general counsel for PCH, said that the company has entered into the agreement with no admission of wrongdoing and to avoid the burdens of extended litigation.


"We're pleased that we could reach a fair settlement and resolve the concerns being expressed," said Low.


The U.S. District Court in St. Louis will hold hearing on Dec. 20 to determine whether the proposed settlement of this action is fair and reasonable.
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