Attorney General Thurbert Baker and Barry Reid, Administrator of the Governor’s Office of Consumer Affairs, announced today that Georgia, 23 other states and the District of Columbia have settled claims against Publishers Clearing House (PCH) for allegedly using misleading sweepstakes promotional materials. Attorney General Baker had filed suit against PCH in Georgia on January 24, 2000, alleging, among other things, that PCH misled consumers into believing they had won when they had not and that purchasing products would increase their chances of winning. PCH is one of the largest direct mail solicitors in the nation, mailing more than 100 million solicitations each year. The mailings consist of a series of personalized form letters that imply consumers, many of them senior citizens, have won or are about to win a major sweepstakes prize. Consumers are led to believe by the materials that they can increase their chances of winning by making more purchases.
“When I have reason to believe that a company is misleading Georgia consumers, especially the elderly, I will take action to stop those practices and seek restitution where appropriate,” Baker said. “I hope that this settlement will result in significant restitution for a number of Georgians, but more importantly, I hope it will prevent future victimization of the elderly using such practices,” he continued.
Among the terms of the settlement:
Statements must convey that the consumer is not yet determined to be a winner, with equal prominence for caveats in winner language.
PCH will identify and send special notices to individuals who spend more than $1,000 annually that they are not required to make purchases in order to have a chance to win the sweepstakes. Consumers who make purchases of $2,500 or more annually will be surveyed to ensure the purchaser understands they do not have to make purchases to participate in the sweepstakes.
Sweepstakes facts, similar to FDA nutrition labels, will be included in sweepstakes mailings, including odds of winning, end date of sweepstakes and other informative consumer messages.
PCH cannot use a document designed to simulate a check unless the face of the document clearly states it is not a check.
PCH will pay nearly $18.3 million, most of which will go into a restitution fund to be paid over a two-year period to customers who had placed orders with PCH totaling $2,500 or more in 1997, 1998, and/or 1999. A third-party administrator, selected by the settling states and paid for by PCH, will oversee the restitution plan.
“Under this agreement, there are more than 700 Georgia consumers who could be eligible to receive a refund of the some of the money they spent with PCH,” Baker said.
Participating in today’s settlement were the Attorneys General of the states of Alabama, Alaska, California, Georgia, Hawaii, Idaho, Illinois, Louisiana, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New York, North Dakota, New Mexico, Ohio, Oklahoma, South Carolina, South Dakota, Utah, Virginia, Washington, Wyoming, and the Corporation Counsel of the District of Columbia.