PCH Settles Deception Charges With 26 States

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Publishers Clearing House has agreed to pay $34 million in a deal with 26 states to head off court battles over charges that the company's sweepstakes mailings contained deceptive language.


The states accused Publishers Clearing House of misleading consumers into thinking they had won or were close to winning the sweepstakes marketing firm's well-known cash prize drawings. The company was also accused of using fictional characters in its mail copy, targeting the elderly and failing to make clear that purchasing items would not increase the chance of winning.


Pennsylvania Attorney General Mike Fisher, whose state was involved in the settlement, referred to the company's marketing materials as "shameless acts of deception" and said the settlement would permanently change Publisher Clearing House's marketing practices.


"This agreement permanently bans PCH from using any false statements regarding a consumer's chance of winning a prize," Fisher said. "Even language that implies a falsehood is strictly prohibited."


Publishers Clearing House said the settlement puts an end to the remaining legal proceedings raised in connection with the deception charges. The settlement includes Wisconsin, the only state to begin a court trial against Publishers Clearing House over the charges.


Benjamin R. Civiletti, a former U.S. attorney general, will serve as an adviser to Publishers Clearing House on complying with the settlement.


"This settlement will allow PCH to move forward doing what we do best -- serving millions of satisfied customers and awarding million of dollars to people all over the U.S.," said Robin Smith, company chairman/CEO.


Of the settlement money, $19 million will go to repay consumers, $14 million will pay for the states' attorney's fees and $1 million for civil penalties. In addition to making the payments, Publishers Clearing House agreed to make changes to its marketing practices, including:


• Adding more disclosures to mailings, making it clear that the consumer has not won and has an equal chance of winning as the other entries, that there is no entry fee, that consumers can enter as often as they like and that buying products will not increase the chances of winning.


• Refraining from making representations that the company is addressing consumers personally and that it has a personal relationship with consumers when one does not exist.


• Avoiding use of fictitious characters, simulated checks or legal documents and any press release or tax advice representing that the consumer is closer to winning than in fact is the case.


The states involved with the Publishers Clearing House settlement include: Arkansas, Arizona, Colorado, Connecticut, Delaware, Florida, Iowa, Indiana, Kansas, Kentucky, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, North Carolina, New Jersey, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, West Virginia and Wisconsin.


Publishers Clearing House, Port Washington, NY, paid $18.4 million in August 2000 to settle similar charges from 24 states and the District of Columbia. Wisconsin originally was part of the earlier settlement but backed out because the state said it would not prevent Publishers Clearing House from continuing its practices.


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