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    Publishers Clearing House settles

    Florida and 25 other states reach a $34-million settlement over lawsuits accusing the sweepstakes company of deceptive mailings.


    © St. Petersburg Times,
    published June 27, 2001

    TALLAHASSEE -- Sadie Ott spent days at home, waiting for the Publishers Clearing House Prize Patrol to pull up at her door.

    "They said it was between me and another person in Florida," said Ott, 78. "I called my friends and I waited."

    But the van bearing balloons, cameras and an oversized check never came. And Ott said she was stuck with a closetful of purchases she didn't need but thought would improve her chances of becoming a millionaire.

    Now, attorneys general across the country say an agreement with the sweepstakes company should end stories like Ott's.

    Florida and 25 other states reached a settlement with Publishers Clearing House on Tuesday in lawsuits that accused the sweepstakes company of deceptive mailings.

    As part of the agreement, the company no longer will use statements like "guaranteed winner" and will pay $34-million in customer refunds, legal expenses and administrative costs to the states. Customers who are eligible for the refund will be identified by the company.

    The company also apologized in the settlement, which still must be approved by a judge.

    "We think this is a good agreement," said Publishers Clearing House spokesman Christopher Irving. Although the company will keep some of the you-could-be-a-winner-style language in its mailings, Irving said disclaimers about the odds of winning and the ability to win without buying anything will be printed throughout the mailing.

    "Anyone, just by looking at the envelope, will not be confused," Irving said.

    Florida Assistant Attorney General Victoria Butler has handled the case for the state since 1998. Butler said the state signed a separate settlement with Publishers Clearing House in 1994, but began looking at the company again after a series of articles in the St. Petersburg Times detailed problems some elderly customers were having with another sweepstakes company, American Family Enterprises.

    "We realized our settlement in '94 didn't go half as far as it needed to," Butler said.

    The Times stories told of customers, many of them elderly, flying to Tampa to claim sweepstakes prizes they had not actually won. Sweepstakes mailouts carried a Tampa return address.

    Others spent thousands of dollars on magazines and other products, thinking it would increase their chances of winning.

    Sweepstakes entries were processed by Time Customer Service, a Tampa-based company owned by Time Warner. That company owns a major share of American Family Publishers, the company known for the sweepstakes plugged by Dick Clark and Ed McMahon. That company later settled a group of lawsuits.

    Ott said she was glad about the settlement with Publishers Clearing House.

    "I think something should be done," said Ott, who estimates she spent hundreds of dollars on trinkets and magazines. Ott stopped after her children found out about the purchases.

    "I bought and I bought and I bought and I piled it up in my closet and I thought at Christmastime: "Who can I give this to,' " Ott said.

    In addition to the apology, the restitution and the change in marketing, Publishers Clearing House will analyze its company records for sweepstakes players who have spent more than $1,000 on products in the past year. The company will contact those people to determine whether they are aware that no purchase is necessary, Butler said.

    Those who still seem confused will be taken off the mailing lists, and an independent party will oversee that, Butler said.

    Of the $34-million settlement, $19-million will go to customers Publishers Clearing House decides are eligible. A $1-million civil penalty and $14-million to cover the states' legal bills account for the rest.

    Florida Attorney General Bob Butterworth praised the settlement.

    "At last, consumers across the country will have a meaningful settlement that holds PCH accountable in ways they have never been held accountable before," Butterworth said in a statement.

    Besides Florida, the other states participating in the new settlement are: Arkansas, Arizona, Colorado, Connecticut, Delaware, Iowa, Indiana, Kansas, Kentucky, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, North Carolina, New Jersey, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, West Virginia and Wisconsin.

    The 26 states had opted not to join an $18-million settlement the company reached last year with 24 other states and the District of Columbia over allegations it uses deceptive promotions.

    - Information from the Associated Press was included in this report.

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    From the Times state desk