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Publishers Clearing House agrees to pay $16 million for consumer refunds in settlement with state attorneys general and DC Corporation Counsel

Tuesday, August 22, 2000

Publishers Clearing House agrees to pay $16 million for consumer refunds in settlement with state attorneys general and DC Corporation Counsel

Corporation Counsel Robert R. Rigsby announced today that his office and 24 state attorneys general have reached a settlement agreement with Publishers Clearing House (PCH) that requires the company to change its sweepstakes mailings and to pay $16 million into a consumer restitution fund. The settlement, which includes the District of Columbia and Virginia, resolves allegations that PCH misled consumers in violation of consumer protection laws.

According to Rigsby, the company's mailings misled many consumers into believing that they were close to winning a large cash prize and that they could increase their chances of winning by ordering magazines or other merchandise. He said, "Many of our senior citizens seem to be particularly vulnerable to these sales tactics."

PCH has agreed in the future not to represent that a consumer may be the winner of a sweepstakes unless the conditions that apply are presented in type size that is no smaller than the type size used for the rest of the representation. The company has also agreed to provide in its sweepstakes mailings a statement of "Sweepstakes Facts" that will include the estimated odds of winning and the following consumer disclosures: "Enter For Free. Buying Won't Help You Win. Enter As Often As You Like. You Have Not Yet Won. All Entries Have The Same Chance Of Winning."

There were dozens of District residents who each placed multiple orders totaling thousands of dollars a year in response to repeated solicitations by PCH. Under the settlement, consumers who spent at least $2,500 in 1997, 1998, or 1999 will be eligible for partial refunds and are to be contacted by a settlement administrator. District residents are expected to receive a total of $80,000 in refunds. In addition, the District government will be receiving $75,000 for its investigative and legal expenses.

The Corporation Counsel's power to enforce the District of Columbia's consumer protection law was enhanced by legislation that went into effect on July 24. The Corporation Counsel received authority to seek civil penalties of up to $1,000 per violation and to subpoena witnesses and documents before filing suit. In addition, the legislation created a consumer protection revolving fund to help fund the Corporation Counsel's consumer protection work. The $75,000 to be paid by PCH will be credited to the revolving fund.

The settlement agreement with PCH is subject to the approval of the District of Columbia Superior Court.

Copies of the proposed Consent Order and Final Judgment (which is to be submitted for Court approval), the District of Columbia's Complaint, and samples of PCH mailings sent to consumers in the District of Columbia are available from the Office of the Corporation Counsel.

Media Contact: Leigh A. Slaughter, Special Deputy Corporation Counsel, (202) 724-5198.