FOR IMMEDIATE RELEASE

Contact: Todd Hallidy
Phone: (302) 577-8314

Date: June 26, 2001

A.G. Brady announces unprecedented settlement with Publishers Clearing House
 

"PCH acknowledges that its mailings were confusing to some consumers in the past. PCH regrets and apologizes for injury suffered by such consumers. PCH is committed to presenting its offers and its Sweepstakes clearly in all mailings and solicitations."
 

(Wilmington, DE) -- With this apology, Publishers Clearing House entered into a groundbreaking settlement with Attorney General M. Jane Brady and 25 other Attorneys General from around the country. In addition to issuing a formal apology for its deceptive sweepstakes promotions, PCH has agreed to promptly pay restitution to consumers who were deceived by its misleading contest entry forms, and to be bound by a court-ordered injunction, making significant and permanent reforms in the way it conducts its future contests. In all, PCH will pay $34 million in restitution, penalties and legal costs to Delaware and 25 other states participating in today's settlement. Delaware's share of the settlement is expected to exceed one-half million dollars. The agreement must still be approved by each state's court and entered as a permanent injunction in each state.

The settlement and permanent injunction will resolve the consumer fraud lawsuit filed by the Consumer Protection Unit of the Attorney General's Office last year in the Delaware Court of Chancery. The lawsuit alleged consumers often were misled by PCH mailings into believing they had won contests or that making purchases would enhance their chances of winning, and charged that PCH targeted elderly consumers by putting important disclaimers in small type which elderly consumers often could not even see. Investigators with the Delaware Attorney General's Office learned of several elderly Delaware consumers who were completely convinced they had won the Publishers Clearing House sweepstakes, and even held parties with friends and loved ones, while they waited for the Prize Patrol to show up at their homes. Today's settlement, according to Attorney General Brady, is expected to completely eliminate this type of confusion and deception.

"This settlement represents a significant victory for Delaware consumers," Brady said. "PCH is admitting it engaged in deceptive practices and will be permanently enjoined by a court order preventing such conduct. Most important, the settlement guarantees prompt restitution to consumers who were wrongly convinced they needed to purchase merchandise to have a better chance of winning."

Last summer, Delaware and the states involved in today's settlement, had rejected an earlier multi-state settlement with PCH, which did not include many of the key concessions obtained from PCH in today's settlement. Significantly, last year's settlement only provided restitution to consumers who spent over $2,500 per year on PCH products. According to Deputy Attorney General Olha N.M. Rybakoff, who also serves as the Director of the Consumer Protection Unit and as lead counsel in Delaware's consumer fraud lawsuit against PCH, the inadequate restitution was one of the main reasons Delaware rejected last year's settlement. According to Rybakoff, today's settlement contains many significant improvements over last year's settlement, including:
 

• A prohibition preventing PCH on making any false statement of any nature in its solicitations, no matter how small or seemingly insignificant; strict prohibitions against misleading or deceptive statements or omissions; and a prohibition on PCH from implying,by any means whatsoever, anything that they are prohibited from stating directly.

 
• The use of a single contest entry form to be used by all consumers whether they order products from PCH or not. (In the past, customers who did not buy magazines or other products were forced to search for a small, plain entry card among the various colorful pieces in PCH's solicitations. This practice -- now ended forever --led many consumers to conclude that those who ordered had a better chance to win than those who did not.)

 
• An acknowledgment from PCH, for the first time, of the harm done done in the past by its deceptive practices, and an apology for that harm.

 

• Increased safeguards to protect particularly vulnerable PCH customers who may continue to be confused about whether buying products has any impact on their chances of winning.