Publishers Clearing House in $34m ‘Deceptive Marketing’ Settlement

27 June 2001

Magazine subscription giant Publishers Clearing House yesterday agreed to pay $34 million in customer refunds, legal expenses and other costs as part of a deal with 26 states over deceptive marketing.

Lawsuits against the company accused it of misleading customers in sweepstakes schemes that they had won something or would do so if they took out subscriptions. PCH had to reach a settlement worth $18m last year with 24 other states.

Yesterday’s deal puts an end to what Pennsylvania attorney general Mike Fisher called “shameless acts of deception against all consumers, especially our senior citizens. Not only did we negotiate refunds for consumers, but this agreement will stop this fraudulent business practice for good.”

PCH must henceforth stop using terms such as ‘guaranteed winner’, supply ‘Sweepstakes Facts Disclosures’, give more prominence to terms and conditions, form a compliance counsel and offer only one way to enter a sweepstake. The company must also stop mailing to ‘high-activity customers’, defined as people purchasing $1000–$2000 of goods per year between 1996 and 1999, with similar procedures to be introduced for subsequent years.

Putting a brave face on it, the company’s chairman/chief executive Robin Smith stated: “We listened to the states' concerns and have agreed to responsive and significant changes that will make our promotions the clearest, most reliable and trustworthy in the industry.”

News source: Wall Street Journal