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States settle Publishers Clearing House "deceptive" trade practices

Consumer Reports News: October 21, 2010 02:09 PM

If you visit the Publishers Clearing House home page, you’ll see a message asking if you’re “the winner we’ll be looking for on November 30th?” That’s pretty enticing, considering that the “ultra combo prize” is $1 million plus $5,000 a week for life.

But there’s something you won’t see. Earlier this month PCH reached a settlement with 32 states and the District of Columbia requiring it to pay $3.5 million and to make changes to its marketing materials.

The settlement addresses allegations that PCH continued to mislead consumers despite consent judgments in 2000 and 2001 prohibiting it from “using false and deceptive trade practices to entice consumers to participate in its sweepstakes,” according to a statement issued by the Colorado Attorney General. You can download the entire agreement in PDF format from the Oregon Attorney General’s Web site.

Among the changes, PCH agreed to modify is mailings to eliminate any suggestion that buying magazine subscriptions or other products from PCH increases the likelihood people will win and that the more they buy, the better their chances.

PCH also agreed to stop sending communications from a “Board of Judges,” which, the states alleged, suggests the recipient is close to winning. And it must hire an ombudsman to review the company’s solicitations.

The agreement also requires PCH to identify “high activity customers”—especially the elderly—who spend hundreds or thousands of dollars on magazine subscriptions, in some cases placing and paying for duplicate orders.

In some instances, PCH must send letters to those customers reaffirming that no purchase is necessary to enter the sweepstakes, that buying will not help them win, and that “the majority of Publishers Clearing House winners did not submit an order with their winning entry.” PCH must halt marketing to some high activity customers altogether.

In agreeing to the latest order, PCH denied violating the previous consent judgment.

In his statement, Colorado Attorney General John Suthers said some of the tactics PCH has used “can be particularly influential on senior citizens.”

He advised family, neighbors and friends to be vigilant in making sure someone is not purchasing PCH products “for the wrong reasons,” such as with mistaken belief that it will increase their chances of winning.

During a recent visits to the PCH website, we found notices advising visitors that no purchase is necessary to enter the sweepstakes and that a purchase will not increase an individual’s chances of winning. Oddly, the notices appeared on the homepage during some of our visits to the site but not others.

We also were troubled by some of the annoying marketing ploys we found.

When we tried navigating away from the sweepstakes entry page without entering our information, a pop-up box stopped us, warning that our entry would be forfeited if we proceeded.

The site also hijacked our Internet browser’s “back” button, preventing us from returning to the previous site we were visiting. The site also launched a pop-up window with an ad from a PCH partner. Finally, two boxes soliciting our consent to receive e-mail offers and other prize-related information from PCH and its partners were checked  “yes” by default.

And by the way, what’s the estimated chances that you’ll win that ultra combo prize? According to PCH, 1 in 1.75 billion.—Anthony Giorgianni

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