June 26, 2001

JUNE 26, 2001

CONTACT: Linda Conti, Assistant Attorney General 207-626-8800

Attorney General Steven Rowe announced today that sweepstakes giant Publishers Clearing House (PCH) will pay $34 million - including restitution to thousands of consumers nationwide - and will make significant and permanent reforms in the way it conducts its future contests. Maine's recovery is expected to exceed $200,000.

In addition to the changes in its future business practices, PCH must pay restitution totaling $19 million for customers who were deceived by its past practices. PCH also will pay, for the first time, civil penalties totaling $1 million, as well as $14 million to cover the costs associated with the states' litigation and the costs of administering the restitution payments.

  Multi-state settlement Maine share (approximate)
Consumer restitution $19 million $163,000
Civil penalties $1 million $36,000
Litigation and restitution administration costs $14 million To be determined
TOTAL $34 million More than $200,000
In the coming months, restitution claims officers will contact Maine consumers who lost significant sums as a result of PCH deceptive practices. The Attorney General's Office estimates that Maine consumers may have claims for up to $163,000 from PCH.

The $34 million settlement and permanent injunction resolves several state lawsuits alleging that PCH mailings misled consumers into believing they had won contests or that making purchases would enhance their chances of winning. The states involved in today's settlement had rejected an earlier multi-state settlement reached last summer.

"These sweepstakes solicitations have preyed on the elderly on fixed incomes. We hope others who take economic advantage of vulnerable people will take a strong message: Get out of our state." Rowe said.

Linda Conti, the Assistant Attorney General who handled the case, said, "This was a long, difficult process, but we stuck to our guns for Maine consumers." Conti said the settlement includes several important concessions from PCH, including:

&:149; A prohibition against making any false statement, no matter how small or seemingly insignificant. In addition, the settlement prohibits misleading or deceptive statements or omissions and, for the first time, prohibits PCH from implying, by any means whatsoever, anything that they are prohibited from stating directly.

&:149; A prohibition against discriminating between consumers who order and those who do not. From now on, PCH may only use a single contest entry form to be used by all consumers, regardless of 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 PCH included with the solicitation. This practice often led consumers to conclude that ordering a product would improve their chance of winning.

&:149; An acknowledgement from PCH of the harm done in the past by its deceptive practices, and an apology for that harm.

&:149; Increased safeguards to protect a small minority of vulnerable PCH customers who may continue to be confused about whether buying products has any impact on their chances of winning.

In Maine, reimbursement of costs flows to the State's General Fund, and civil penalties are used by the Attorney General to support other actions under the Unfair Trade Practices Act.