Sweepstakes policies changing
By PAUL WILBORN
© St. Petersburg Times, published March 14, 1998
TAMPA -- Faced with more than a dozen lawsuits and stung by months of negative publicity, American Family Publishers is making changes in response to some of its legal and public relations problems.
A settlement is expected to be announced next week between the company and 32 states that have been investigating the sweepstakes and magazines sales company the past three years for allegedly deceptive trade practices.
In January, Florida withdrew from that investigation and accused American Family in a civil suit of violating the state's consumer protection laws. Two other states, Connecticut and Indiana, also have sued the company, and New York and South Carolina are considering lawsuits.
USA Today reported Friday that American Family has agreed to pay $50,000 to each state still part of the multistate investigation. The company also said Friday it will change some language in its mailings to make it more clear that contestants don't have to buy magazines to win.
Neither the company nor the Texas attorney general's office, which is leading the investigation, would discuss details of the settlement. A spokeswoman for American Family said: "We expect the attorney general will announce the principals of the agreement shortly."
American Family released a list of what it calls "voluntary initiatives to educate and inform the public" about how the company operates.
Those initiatives include an annual letter sent to customers who order a large number of magazines or other products reminding them that no purchase is necessary to win. The company also plans to highlight that message in its advertising.
The company no longer will route sweepstakes entries from participants who don't buy magazines to Waycross, Ga., said Jeanne Meyer, a company spokeswoman. Florida Attorney General Bob Butterworth's investigators found that those "No" letters never went to Waycross, but were held in Jacksonville and trucked to Tampa, where the "Yes" entries are processed.
Now all entries will go to Tampa post office boxes, Meyer said.
The company said it also will work with the Direct Marketing Association to create a better method of allowing people to have their names removed from mailing lists.
And American Family will establish a toll-free number and an Internet Web site for consumer questions about company policies and sweepstakes rules.
"We basically think this will send a strong message that consumer interests are being served," Meyer said. Since October, The Times has documented 20 instances of people, most elderly, flying to Tampa to claim a sweepstakes prize they hadn't actually won. Other stories told of elderly people around the country who had spent hundreds, and in some cases thousands, of dollars on magazines and other products in hopes of winning a sweepstakes prize.
Most said they thought they increased their chances of winning by buying a magazine or other product from American Family.
Meyer said the negative publicity about American Family's practices prompted some of the changes.
"Because of the recent attention, it absolutely is the company's responsibility to remind people of these things," she said.
The settlement with the other states has no bearing on Florida's lawsuit against American Family. In the January lawsuit, Butterworth blasted what he called the company's deceptive and reprehensible trade practices.
Les Garringer, a Butterworth deputy, said he hadn't seen a final draft of the multistate agreement, but he didn't expect it to go far enough to satisfy his office.
While there is a place for multistate investigations and settlements, he said, they are, by their nature, "inherently a little weaker" than when a state goes it alone.
Florida also is investigating whether American Family double-billed consumers for magazines. If a customer paid twice, the second payment simply is used to extended the magazine subscription without the customer's knowledge, investigators say.
One of the attorneys suing American Family called the settlement "an admission of guilt."
"That they are making this settlement, small though it may be, they are admitting what they were doing is wrong," said Scott Solkoff, an elder law attorney in Deerfield Beach.
Tampa lawyer Frank Jakes said the proposed settlement won't stop his firm's federal class-action lawsuit against American Family.
"It has absolutely no bearing whatsoever on our case and how we are pursuing it, which is aggressively," Jakes said.
©Copyright 1998 St. Petersburg Times. All rights reserved.