Four More States Sue PCH

Circulation Management, Nov, 1999

In other sweepstakes developments, Florida, Arizona, Missouri and Texas have all recently filed suit against Publishers Clearing House, accusing the sweepstakes marketer of using deceptive tactics to sell magazines and merchandise. Hearings are still pending on PCH lawsuits already filed by Washington, Wisconsin, Connecticut and Indiana, as well as on a proposed nationwide class-action suit that would settle all PCH liabilities for $10 million. A fairness hearing on the proposed class-action settlement is schedule for December 20. However, the attorneys general of several states, including Florida, Wisconsin, Connecticut and Indiana, have objected to the terms of that proposed settlement, and have urged state residents to reject it (October, page 12).

The AGs of the states that recently filed suits indicated that they had become tired of negotiating. Florida AG Bob Butterworth, for instance, maintained that "months of negotiations with PCH failed to produce any meaningful changes to the deceptive solicitations mailed out by the company. The time has come to let the court decide this matter."

Florida, one of three states that reached a $4 million settlement with American Family Publishers last May, is seeking at least $40 million in consumer restitution and civil penalties from PCH under the state's Deceptive and Unfair Trade Practices Act. The other suits also ask for consumer restitution and various civil penalities, and some are seeking injunctions against specific practices or future "deceptive" mailings. The suits accuse PCH of deceiving recipients into believing that they are winners or are on the verge of winning, and that purchasing magazines or merchandise enhances their chances of winning. At least two allege that practices such as asking for directions to the recipient's home deceived individuals into believing that PCH's Prize Patrol would be visiting them. The Arizona suit singles out PCH's use of envelopes "that appear to be from official agencies or banks," and several, including the Texas suit, charge targeting of the elderly.

PCH counters that its mailings were not deceptive because they clearly stated odds of winning, and that no purchase was necessary to win. PCH director of consumer affairs Christopher Irving points out that the company has taken steps to clarify its mailings, including adding a standard box highlighting statements such as "Buying will not help you win," and is already taking voluntary steps to limit mailings to active buyers. "We are concerned about consumers who have been high-volume and may be confused, and we have created unique, breakthrough programs to identify them and remove them from our mailing list," including contacting these customers with "no purchase necessary" letters, Irving says.