Advertising Law Blog

Publishers Clearinghouse has signed a new consent judgment with thirty-two states and the District of Columbia that beefs up the company's 2000/2001 thirty-three state agreement. The new agreement contains a number of important limitations and compliance obligations not typically contained in consent orders.

The previous settlement resolved allegations made by the states that Publishers Clearinghouse engaged in deceptive marketing practices by mailing promotional materials designed to mislead consumers into believing their odds of winning sweepstakes prizes could increase if they made purchases from the company.

The most recent investigation raised concerns PCH was not complying with the earlier agreement and that consumers were still unclear about the nature and language of some of the company's sweepstakes promotional mailings. The new agreement adds additional provisions to address these issues. Notably, PCH will be required to conduct more robust surveys to make certain that consumers understand that their odds of winning a sweepstakes prize do not increase with the purchase of any of PCH's products. In addition, the agreement provides limitations on the number of customer-only sweepstakes. Furthermore, the agreement restricts the use of certain terms and devices, including listing of order history and entries, pre-checked boxes, separation of sweepstakes entry and product ordering information, and the use of the terms in advertising such as "key code," guarantee as it relates to a sweepstakes prize, winner selection committee or winner search party, and board of judges

PCH will also pay $3.5 million, divvyed among the state participants, to pay for investigation costs.

A sample copy of the consent judgment with the State of Virginia can be found here.