Publishers Clearing House Sweepstakes Solicitations Under Scrutiny
WASHINGTON, DC -- A Senate Special Committee on Aging investigation is raising questions about whether consumers are being misled by deceptive sweepstakes promotions from Publishers Clearing House (PCH), a committee report released today shows.
The investigation, led by Sen. Bill Nelson (D-FL), the committee’s chairman, and Ranking Member Susan Collins (R-ME), found numerous examples of solicitations that appear to “push the limits” of federal law and settlement agreements PCH reached with dozens of state Attorneys General over the last two decades.
At issue is whether the company is continuing to mislead consumers by giving them the impression they have won or are close to winning a prize, or that buying products or subscriptions increases one’s chance of winning. The use of misleading solicitations would violate the settlement agreements and run afoul of a law Congress passed to regulate sweepstakes mailings.
“I’m all for folks winning prizes but it concerns me when seniors still report they’re being misled by Publishers Clearing House,” said Nelson. “If people are concluding that they have to buy something to enter or win the sweepstakes, then we need to make sure that gets corrected.”
PCH has long been scrutinized for its aggressive sweepstakes promotions that promise big cash prizes while at the same time peddling merchandise, such as magazine subscriptions.
In 1999, the U.S. Senate Permanent Subcommittee on Investigations, then chaired by Sen. Collins, held hearings to examine deceptive sweepstakes mailings and promotions. The hearings revealed the sophisticated—and often very deceptive—nature of PCH’s and other sweepstakes promoters’ direct marketing campaigns and led to the enactment of the Deceptive Mail Prevention and Enforcement Act. The law created new standards for disclosure by requiring mailings to include the odds of winning a prize, the rules of the contest, and a statement that no purchase is necessary.
The following year, 2000, PCH settled with 23 states and the District of Columbia over allegations that the company was misleading consumers into believing that they were close to winning a prize, and that ordering magazines and other merchandise would increase their odds of winning. The company admitted no wrongdoing but agreed to pay over $18 million, including $15.9 million in restitution to customers.
In 2001, 26 states settled with PCH over essentially the same allegations, which led the company to pay another $34 million in restitution and fines and to issue an apology. A decade later, 33 states and the District of Columbia secured a $3.5 million settlement in 2010 from PCH after alleging the company was violating its earlier agreements.
Meantime, the volume of solicitations the company delivers through the mail has declined, while online communications have increased dramatically, a transition which could not have been foreseen when Congress passed the deceptive mailings law 15 years ago.
“Our laws should prevent unscrupulous solicitors from taking unfair advantage of our seniors,” said Collins. “That is why, as a new Senator, I led the Senate investigation into the deceptive practices of certain sweepstakes. I learned of far too many instances of seniors spending their life’s savings to participate in contests that they believed they would win when in fact, the odds were very high that they would not. This investigation led to the “Deceptive Mail Prevention and Enforcement Act,” which I authored and which became law in 1999.”
“This law has been very successful in protecting consumers against deceptive mailing practices. Given the significant shift in recent years to electronic communications, however, it may be time to consider updating this legislation to cover e-mail and online communications. This Publishers Clearing House report of the Senate Special Committee on Aging provides an important first look into this question,” Collins added.
The report released today includes detailed examples of PCH solicitations that committee staff identified as potentially misleading to consumers. Among these include:
- Solicitations that incorporated maps of the recipient’s neighborhood, along with a statement that a prize is “approved for delivery.”
- Letters accompanied by “Stay Rich Tips for New Winners” inserts which tell recipients to “buy and spend smart” and to “contact a reputable accountant or financial advisor.”
- Envelopes used for mailing in sweepstakes entries that include detachable notices that read: “OOPS! Did you forget to place an order?”
- Various warnings that appear when a consumer is entering a sweepstakes online, including “Order History Review: No Order Ever Placed” and “Wait! We See That You Are Not Placing an Order!”
In addition, a staff review of consumer complaints against PCH confirmed that many consumers believe the company is still using many of the exact messages previous settlements sought to eliminate. The report concluded that new legislation may be needed to better protect consumers from email and online sweepstakes promotions.
The committee began its investigation after receiving reports of senior citizens who made frequent purchases from PCH. For example, an elderly Pennsylvania man was so convinced he was about to win a big prize from PCH that he called his son to ask him if he could be on hand for the giveaway. The son later discovered his father had spent more than $2,600 on PCH merchandise over a two-year period in hopes it would improve his chances of winning.
During the investigation, committee staff reviewed hundreds of direct mail and online solicitations from PCH; reviewed consumer complaints; and consulted with an expert in marketing and persuasion. The inquiry largely focused on the practices highlighted and found most troubling by Congress in 1999, as well as by state Attorneys General in their settlement agreements.
To read the full report, click here PCH Report