Spitzer Announces Landmark Settlement With Publishers Clearing House

Attorney General Spitzer today announced an $18 million multi-state settlement with Publishers Clearing House over its deceptive sweepstakes promotions. The two-year investigation was prompted by numerous consumer complaints against the company.

As part of the agreement, PCH will fundamentally change its business practices and give refunds to thousands of consumers in New York and across the nation who were lured into buying merchandise because they believed it would increase their chances of winning a sweepstakes.

"People should know that they have about as much chance of winning these sweepstakes as they do of getting hit by lightning," said Spitzer. "We believe that this agreement will help put an end 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 that it will help them win a grand prize."

The settlement calls for $1.58 million in refunds for some 1,600 New York consumers. Those eligible include any consumer who spent at least $2,500 in purchases in any year between 1997- 1999. In addition to the consumer refunds, the state Attorneys General offices will receive $2.3 million for the costs of the investigation, of which New York will receive $148,000.

Since 1967, the Port Washington, Long Island-based PCH has aggressively sold magazine subscriptions and other merchandise to consumers throughout New York and the nation. The company mails more than 100 million solicitations a year nationwide, with some consumers receiving as many as 150 per year. PCH's well-known promotional campaign features direct mail that states "You are a Winner" in a million-dollar sweepstakes.

In settling lawsuits filed by 23 states and the District of Columbia, Publishers Clearing House will be prohibited from using "You are a Winner" proclamations unless it provides in equal prominence the important qualifying conditions necessary for winning.

The agreement requires inclusion of a "Sweepstakes Facts Box" that will clearly disclose important information such as odds of winning, together with all major prizes, values, quantities and end date for the sweepstakes. The Facts Box must also include important disclaimers which tell consumers that "Buying Won't Help You Win," and "You Have Not Yet Won."

Publishers Clearing House is also required to maintain a "Do Not Contact" list for consumers who do not want to receive future sweepstakes offers.

In addition, PCH will be prohibited from:

  • misrepresenting the chances of winning a prize;

  • requesting certain information or action from recipients which would lead them to believe they have won. This includes their whereabouts at the time the prize is awarded or their preference for events related to the awarding of the prize;

  • using a personalized simulated check to mislead a recipient into believing he/she has won or is likely to win;

  • representing that a recipient has an enhanced chance of winning a prize, is in a select group, has "never been closer" to winning or enjoys a special status in the sweepstakes and

  • misrepresenting a sweepstakes mailing as being delivered by special delivery or that any communications are from a federal or state government or other official entity.

Individuals interested in filing a complaint against Publishers Clearing House are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.

States joining New York in the settlement include: Alabama, Alaska, California, Georgia, Hawaii, Idaho, Illinois, Louisiana, Mississippi, Montana, Nebraska, Nevada, New Hampshire, North Dakota, New Mexico, Ohio, Oklahoma, South Carolina, South Dakota, Virginia, Washington, Wyoming, as well as the District of Columbia.

The settlement was filed this morning in State Supreme Court in Manhattan. Publishers Clearing House admits no wrongdoing.

This case was handled by Assistant Attorneys General Shirley Stark, Melissa Saren and Amy Mayer of the Consumer Frauds and Protection Bureau.