More States Sue PCH

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Seventeen state attorneys general said they have filed lawsuits against Publishers Clearing House, the Port Washington, NY-based stampsheet marketer, this week, saying, among other things, that the company participated in false advertising and misled consumers into believing they had a better chance of winning if they ordered more products.


The attorneys general also said PCH, which will announce its $21 million sweeptakes winner on Sunday during the Super Bowl telecast, misrepresents that it has a personal relationship with consumers and induces people into believing that they are guaranteed winners of big prizes.


The states that filed suit are: Colorado, Minnesota, New York, North Carolina, New Jersey, Illinois, Ohio, New Mexico, Oklahoma, Vermont, Oregon, Pennsylvania, West Virginia, Louisiana, Georgia, Utah and California. Each state filed its own claims.


Similar complaints were filed earlier this year in nine states: Florida, which in September sued for $40 million in restitution and damages; Arizona; Connecticut; Michigan; Missouri; Texas; Wisconsin; Washington and Indiana.


"Publishers Clearing House's deceptive sweepstakes solicitations are designed to convince consumers that they are on the verge of winning big and that additional orders of magazines or goods are needed to improve their chances of winning," said Minnesota Attorney General Mike Hatch.


Hatch said his office was contacted by more than 240 people about what they considered deceptive practices by PCH. The lawsuit seeks restitution for consumers and civil penalties of $25,000 per violation. Hatch also is seeking a supplemental civil penalty of $10,000 for each violation against a senior citizen.


The California suit seeks an injunction to prohibit PCH from sending deceptive mailings and seeks refunds for California consumers allegedly defrauded by the estimated 100 million pieces of mail the company sends nationwide each year. It also charges PCH with intentionally masking the bulk nature of its mailings with envelopes designed to look like personal letters, as well as letters designed to look like government forms and official documents.


"Publishers Clearing House for years has been targeting the elderly and the gullible with a blizzard of deceptive mailers that are really disguised sales pitches," said California Attorney General Bill Lockyer. "We want to stop the sweepstakes company from fraudulently luring Californians into buying magazines, collectibles and other goods with the mistaken belief that they are improving their chances of becoming an instant millionaire."


The Illinois suit charged that the defendant's actions violate the Illinois Consumer Fraud and Deceptive Business Practices Act.


"We're alleging that this company crossed the line from aggressive marketing to deception," said Illinois Attorney General Jim Ryan. "Too many Illinois consumers are being deluged with misleading sweepstakes promotions from this company and wasting thousands of dollars. It has to stop.''


Ryan is seeking a permanent injunction to prevent PCH from mailing any sweepstakes solicitations to Illinois residents. In addition, the suit asks the defendant to pay restitution, costs, a civil penalty of $50,000 and an additional $50,000 penalty for each act found committed with intent to defraud. The suit also asks for an enhanced penalty of up to $10,000 for each person defrauded who is 65 years old or older.


Pennsylvania Attorney General Mike Fisher said his state's suit was filed for allegedly violating Pennsylvania's Unfair Trade Practices and Consumer Protection Law, and asks the court to order PCH to pay full restitution to consumers; halt the promotion of sweepstakes that violate Pennsylvania's Consumer Protection Law; and pay civil penalties of $1,000 per violation and $3,000 for each violation involving a person age 60 or older.


Fisher said "we contend that Publishers Clearing House is blanketing the state with sweepstakes offers that are not only deceptive but harmful to consumers. The company's alleged illegal business practices shamelessly prey on older Pennsylvanians who spent a lot of money on magazines and other items -- convinced that the 'Prize Patrol' [the van which delivers the $21 million prize to the winner on Sunday] is about to deliver thousands of dollars to their door."


While, no one from PCH returned calls for comment, reportedly, Christopher Irving, director of consumer affairs at PCH denied the allegations and said the majority of people who return their sweepstakes entries do so without ordering. In addition, Irving said the company does not target any age group or demographic.


The attorneys general filing the most-recent group of suits decided to do so because of a nationwide class-action settlement the company is currently involved in to resolve a civil litigation pending against the company. A fairness hearing to finalize the case was scheduled for yesterday in U.S. District Court in East St. Louis, IL, and the attorneys general feared a settlement in that case might keep them from suing in the future.


The original lawsuit was filed by 10 consumers in Illinois who claimed that PCH duped them into buying magazines and books by making them think it 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 43 million households who have purchased magazines or merchandise from PCH between 1992 and June 30, 1999. Of the 43 million consumers eligible in the class-action lawsuit, about 100,000 people responded.


PCH is not the only stampsheet marketer to face lawsuits recently.


Reader's Digest Association Inc. Pleasantville, NY, was sued by the state of Connecticut this month over its alleged deceptive" sweepstakes promotions. In addition, American Family Publishers, Jersey City, NJ, reached a $3 million settlement in May with Florida and five other states.


Late last year , President Clinton signed into law a measure designed to help protect people from sweepstakes scams. It bars sponsors from implying that buying products can increase entrants' chances of winning big prizes, requires prominent display of messages that no purchase is required and bars telling recipients that they have won a prize unless they actually have. It also imposes million-dollar fines on sweepstakes companies that violate the law.


These lawsuits, however, are state measures and are unrelated to the federal law signed by Clinton.
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