Publishers Clearing House to refund $18 5 million in FTC settlement

Table Of Content

• Publishers Clearing House class action overview:
• Get consumer protection basics, plain and simple
• Government regulation and legal actions
• Consumer Facing Applications: A Quote Book from the Tech Summit on AI
• Ten Years Ago, His Book about Civilizational Collapse Got Unexpectedly Popular. He’s Back With a Little Bit of Hope.
• Recent Consumer Alerts

The FTC lawsuit is not the first time Publishers Clearing House has dealt with litigation regarding their business practices. In 2000, a $30 million settlement was approved for a class-action lawsuit that claimed the company misled customers into buying magazines—purchases made with the belief it would increase their chances of winning a sweepstakes. The federal judge who approved the settlement said as much as $21 million would be paid in claims and that claimants would get full refunds of what they paid to the company. Publishers Clearing House also paid $18 million in a settlement from the same year that also alleged customers were misled into thinking their purchases of merchandise would increase their chances of winning a sweepstakes. In 2018, similar allegations were filed against the company in a class-action lawsuit that also claimed that Publishers Clearing House was selling consumers’ personal information. However, in a complaint against PCH, the FTC said the company uses “dark patterns” to mislead consumers about how to enter the company’s well-known sweepstakes drawings and made them believe a purchase is necessary to win or would increase their chances of winning.

Publishers Clearing House class action overview:

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Is Publishers Clearing House a Scam?.

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Instead, the complaint charges, consumers enter an arduous journey through pages of advertisements and sales pitches before they can actually enter the sweepstakes. The advertisements allegedly use tricky wording that conflates ordering and entering to lead consumers to believe they must make a purchase to enter, or that purchasing will increase their chances of winning a sweepstakes, neither of which is true. Last week the article “No One Buys Books,” by Elle Griffin, went viral, topping Substack categories and being shared widely on social media. Over 90 percent of books sell fewer than 1,000 copies; 50 percent of books sell fewer than 12 copies. The article paints a nearly apocalyptic portrait of traditional publishing, in which nothing works, few make money, nobody reads, and the whole industry might go poof at any moment. This vision is appealing to many people, including writers who (fairly or unfairly) feel stymied by the industry, popularists who think reading itself is a snobby hobby, and tech types who mock “paywalled dead trees.” The only problem is, the picture isn’t true.

Get consumer protection basics, plain and simple

Each individual state—or territory, in Puerto Rico’s case—has a right of publicity statute that prohibits the practice of selling or renting mailing lists containing personal identifying transaction data, according to the class action lawsuits. Instead, the complaint charges, consumers go through pages of advertisements and pitches with tricky wording leading customers to believe they must make a purchase to enter, or that purchasing will increase their chances of winning, neither of which is true. Once consumers enter their email addresses they continue to receive alerts from the company saying that they must take another step to be eligible for sweepstakes prizes, the complaint said. In addition to these misleading practices, Publishers Clearing House hid shipping and handling costs from consumers until there was a financial obligation. While the company also maintained they didn't sell or rent consumer data, the FTC alleges they did as such until around January 2019, when Publishers Clearing House learned they were being investigated, according to court documents.

Government regulation and legal actions

(The closemouthed way the latter handles its data has already famously mucked up movie stats.) But “books” encompass everything from niche academic monographs and Sudoku puzzle collections to bestselling novels and memoirs. It would be as if “movie” statistics included educational videos, online porn streaming, and TikToks. The sale would be a violation of Utah’s Notice of Intent to Sell Nonpublic Personal Information Act, the Publishers Clearing House class action lawsuit claims. Moreover, the FTC is not the only entity that has expressed an interest in regulating dark patterns. Indeed, several state comprehensive privacy laws — including statutes and regulations now in effect in California, Colorado, and Connecticut — impose restrictions on companies’ use of dark patterns. Thus, companies should expect regulatory interest in dark patterns at both the federal and state levels.

"This is our second dark pattern lawsuit over the last week," Samuel Levine, director of the FTC's Bureau of Consumer Protection, said of the PCH lawsuit in a written statement. "Firms that continue to deploy deceptive design techniques are on notice." PCH, known for its prize patrols and oversized checks, said in a state Worker Adjustment and Retraining Notification filing that nearly half of the 393 workers at its 300 Jericho Quadrangle headquarters would be let go from July 19, 2024, to Feb. 28, 2025. The company said the layoffs are due to the “winddown and eventual closure” of its commerce line of business. Direct marketing to consumers has been part of the business.

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Companies can expect dark patterns to continue to be an area of focus for FTC enforcement and should ensure that their customer experiences are sufficiently transparent and intuitive to pass FTC muster. Though it agreed to the settlement, a spokesman for PCH denied that its customers had been coerced to buy products. Publishers Clearing House (PCH) has agreed to compensate customers affected by its “misleading” business practices $18.5 million, according to the Federal Trade Commission (FTC). PCH agreed to the proposed court order that requires the company to turn over $18.5 million to the FTC. "As part of a settlement, PCH agreed to pay $18.5 million, among other things."

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They do not belong to or represent views of the Federal Trade Commission. Publishers Clearing House did not immediately respond to a request for comment. The Commission vote authorizing the staff to file the complaint and stipulated final order was 3-0. Chair Khan and Commissioners Slaughter and Bedoya issued a separate statement. The FTC filed the complaint and final order/injunction in the U.S.

New Port Richey man wins big prize from Publishers Clearing House - FOX 13 Tampa

New Port Richey man wins big prize from Publishers Clearing House.

Posted: Mon, 08 Jan 2024 08:00:00 GMT [source]

Ten Years Ago, His Book about Civilizational Collapse Got Unexpectedly Popular. He’s Back With a Little Bit of Hope.

Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts. As a result of a Federal Trade Commission lawsuit, Publishers Clearing House (PCH) has agreed to a proposed court order that will require it to pay $18.5 million to consumers who spent money and wasted their time, and make substantial changes to how it conducts business online.

Recent Consumer Alerts

When disclaimers and clarifying information were included on PCH webpages, they were in a small, light font that could easily be overlooked by consumers, according to the FTC. PCH — famous for surprising winners at their front doors with giant checks and balloons — must substantially change its business practices, the FTC said. I agree with you to pay the customers what they lost.I wanted to believe it was true but I knew it wasn't I've been submitting Sweepstakes entrances since 1992 and didn't hear anything til ntil someone told me I won the big prize.

On the other hand, that’s “new movies in theaters” vs. “all books available for sale from throughout history.” Movies are vastly more expensive to make, so far fewer movies are released each year than books are published. Individual movies are watched far more than most individual books are read. The FTC also said the company claims sweepstakes entries are incomplete even when they are not. These allegations from FTC also affect Utahns who have been misled by PCH’s sweepstakes drawings. The FTC’s emphasis on PCH’s use of dark patterns is the latest manifestation of a recent trend, with the Commission having issued guidance on the topic last year, and having incorporated the concept into several recent complaints.

I have been buying and dealing with PCH for more than 20 years. Tells people your chances are better if you buy something. I learned from all these years buying from PCH that this is not true at all. Ive never heard of them putting things in your cart you didnt order.

PCH is perhaps best-known for its long-running sweepstakes promotions. The lawsuit charged that PCH used "dark patterns" — misleading phrases and website design — to persuade consumers that they needed to buy a product to enter a sweepstakes or increase their chances of winning. After hopeful customers click on sweepstakes registration links emailed to them by the company, they are directed to several web pages of advertisements for products, including magazine subscriptions, the complaint said. These pages say messages like "$1,000 per week for life AT STAKE!" and "JUST ONE ORDER IS ALL IT TAKES," the news release said.

Don't pay anyone who contacts you and promises you a refund but asks you to pay a fee or attempts to obtain your personal information. If you believe you are eligible for a refund, there is nothing you need to do. When we have more information about the refund program, we will post updates here and provide information directly to consumers who are eligible for a refund. PCH didn't return a request for comment on the settlement or allegations by press time. Publishers Clearing House is accused of selling names, addresses and purchasing information, along with demographic information such as age. The lead plaintiffs each want to represent a Class of Illinois, South Dakota, Puerto Rico, Ohio, and California residents who had their names appear on a mailing list that was sold, rented, or offered for sale by PCH.

If I look at the top 10 percent of books … that 10 percent level gets you to about 300,000 copies sold in that year. And if you told me I’m definitely going to sell 300,000 copies in a year, I would spend many millions of dollars to get that book. The plaintiff claim PCH never asked for permission before selling or renting their personal information on the open market to data miners, data aggregators, data cooperatives, aggressive marketing companies, list brokers, and others. "Today's action builds on previous efforts to crack down on companies that use illegal dark patterns to fuel digital deception and harm consumers," FTC Chair Lina Khan and commissioners said in a statement. The agency says PCH made it seem as though customers needed to purchase a product on the PCH website in order to be eligible to win or to better their chances of winning a prize.

As a result of the lawsuit, PCH has agreed to a court order requiring the company to make substantial changes to how it conducts business, and requiring the company to pay $18.5 million to consumers who spent money and wasted their time. The PCH complaint stands as yet another reminder of the importance of ensuring that your company’s privacy policy disclosures regarding the use of consumer data are consistent with your actual practices. In this case, the FTC alleged that PCH’s assertion that it did not “rent, license, or sell” consumer personal information was inconsistent with its actual practice of sharing consumer information with third parties for targeted advertising purposes. Before publishing privacy policies, companies should carefully vet the accuracy of their data use disclosures, as privacy policy misrepresentations have been a mainstay of recent FTC enforcement actions. The FTC says that Publishers Clearing House used language and designs on its website and in its email marketing that tricked consumers, including many older adults, into believing they had to buy things on the PCH website to enter a sweepstakes.