For immediate release – Tuesday, December 18, 2007.
Contact Bob Brammer – 515-281-6699
Publishers Clearing House
Must Stop Sweepstakes Solicitations
to Vulnerable Older Iowans
“PCH has a track record of exploiting older Iowans,” said Attorney General Tom Miller.
Des Moines. Publishers Clearing House must reform how the company handles older Iowans who spend large sums on magazines and merchandise in pursuit of a sweepstakes prize. PCH also has refunded more than $60,000 to elderly victims, including some with refunds over $10,000.
“The problem now is that many older Iowans mistakenly think that buying magazines or products will increase their chance of winning a huge sweepstakes prize,” said Attorney General Tom Miller, “and that’s a recipe for exploitation.”
“Last year alone, more than 850 Iowans sent PCH more than $1,000 each in response to sweepstakes mailings, and 50 sent more than $3,000 each, with an average age of 76,” he said.
Miller said PCH has agreed to a formal “Letter of Understanding” with the Attorney General’s Office that requires PCH to implement a program to identify elderly consumers at the point where their spending is just beginning to be excessive -- when an Iowan age 65 or over has spent $500 or more in a calendar quarter for PCH products.
Such persons will be contacted and interviewed by telephone to make sure they truly understand that buying doesn’t improve their chances of winning, and to remove them from the mailing list if they are vulnerable to exploitation. The agreement contains numerous other stringent terms, including a $2,500 penalty if a person removed from PCH lists continues to receive sweepstakes solicitations.
“We hope this settlement puts an end, once and for all, to the decades-long stream of older Iowans who send Publishers Clearing House large sums of money in a misguided effort to win a sweepstakes jackpot,” Miller said. “This company has a terrible track record of exploiting the elderly, and it has to stop.”
Terri Golightly appeared at the Dec. 18 news conference with Attorney General Miller. Golightly said her father-in-law (who died last summer) had sent large sums to PCH, thinking he had won or was about to win a major sweepstakes prize. Golightly said his estate received a refund from PCH. Years earlier, Golightly said, she had been through a similar situation with her elderly grandfather.
Background and Details
Terms of the new PCH agreement:
- PCH must identify each Iowa spender of $500 or more in a quarter who is age 65 or over, conduct a telephone survey or discussion with the person, and “suppress” consumers (remove them from lists) if they have misunderstandings about sweepstakes (for example, if they do not know that making a purchase does NOT increase their chance of winning.)
- PCH must improve its safeguards against sending solicitations to anyone who has been removed from the mailing list. Miller said that this has happened repeatedly in the past, and that PCH will have to pay full refunds and a $2,500 penalty for every time it happens in the future.
- PCH must refrain from sharing the names of vulnerable older customers with other marketers. Miller said that many elderly Iowa victims were being hit with solicitations from all sides, by a number of different companies. “PCH has been selling the names of high-spending customers known to be elderly to other sweepstakes operations,” Miller said. “This will now stop.”
- PCH must monitor magazine subscription purchases to identify elderly Iowans whose pursuit of a sweepstakes prize results in magazine subscriptions extending several years into the future. Miller noted that PCH repeatedly sold a 100-year-old Eastern Iowa woman subscriptions to Prevention magazine that extended to the year 2013.
- PCH must send a non-promotional letter to Iowans who spend more than $1,000 in a year, emphasizing that buying doesn’t bring about a win. The letter will also be required to inform consumers that “the majority of Publishers Clearing House winners did not submit an order with their winning entry.”
- PCH refunded more than $60,000 to individual elderly victims in connection with the settlement, including some that received refunds of more than $10,000. PCH also is paying $50,000 to the State of Iowa for costs of the investigation and consumer protection education and enforcement.
“The company has drained the retirement funds of too many older Iowans,” Miller said. “We are glad to see money being returned to people who need it so much.”
Iowa A.G. legal action vs. Publishers Clearing House:
This is not the first time the Iowa Attorney General has tangled with PCH over its sweepstakes solicitation practices. In October 2001, a Consent Judgment was entered in Polk County District Court, requiring PCH to change its mail solicitations and adopt special measures designed to protect older consumers from high dollar losses. Similar judgments were filed in the courts in most if not all fifty states.
“We hoped that the 2001 judgment would change the company and protect Iowans,” Miller said. “But the company’s subsequent conduct has shown that it has not changed, and is still eager to interpret its obligations in ways that victimize Iowa consumers.”
How long the new agreement remains in place is up to the company, Miller said. “PCH can walk away from the agreement any time, after giving us sixty days notice,” he said. “But if they do, all bets are off, and we are immediately free to sue them for consumer fraud and for violating the 2001 court order.” Miller said his office believes it has clear evidence of past wrongdoing by PCH, and that the only way PCH can avoid answering for that wrongdoing in court is by sticking to the negotiated reforms. For its part, PCH denies any wrongdoing.
The new agreement is not the only effort by the Attorney General’s office to deal with PCH this year. In April the Consumer Protection Division sent out warnings to about 850 high-spending Iowans, urging them to return a postcard to be removed from PCH’s mailing list if they felt they were being victimized. About 330 Iowans asked to be removed, representing more than half a million dollars in annual spending by predominantly elderly households.
Examples of older Iowans who have lost thousands of dollars to PCH:
Miller said his Consumer Protection Division had learned of numerous instances of elderly Iowans sending PCH large portions of their limited incomes, acting in the false belief that PCH is closely watching how much they spend and will make sure they win the sweepstakes if they spend enough. Miller said that these false beliefs are directly traceable to strong and repeated insinuations in the company’s mailings.
Miller cited several examples of Iowa victims:
- A 92-year-old Des Moines veteran with an annual income of less than $10,000 was the target of a large volume of Publishers Clearing House sweepstakes mailings. He became persuaded that he was close to winning, and in 2005 spent $2,700 of his meager income chasing the sweepstake prize. Many of his PCH purchases were stacked up, unopened and unused, leaving little space to move around his one-room apartment. PCH knew of his spending and income, but decided that he wasn’t spending “beyond his means.” So PCH kept the barrage of solicitations coming, and managed to get more than $4,000 from him -- almost half his total income -- in 2006.
- An 89-year-old Waterloo woman responded to PCH sweepstakes solicitations by ordering more than $8,000 worth of merchandise in a single twelve-month period.
- A 100-year-old Cedar Rapids woman was completely persuaded by PCH mailings that she was about to win the sweepstakes. She worried that the prize patrol and cameras would be too cramped in her care facility room, so she wrote a letter asking PCH to make the presentation at her son’s house. Believing she needed to keep ordering to maintain her standing in the sweepstakes, she responded to a heavy stream of solicitations by ordering more than $6,500 worth of merchandise in 2006 alone. She didn’t want many of the items she ordered, and sold some of them at a substantial loss.
- An 83-year-old Williamsburg woman believed she was close to winning, and sent PCH almost $5,000 in 2005. Iowa’s 2001 court order required PCH to try to determine whether she was spending to win, and if so to stop mailing to her. But when PCH’s effort to contact her for this purpose proved unsuccessful – she would not speak on the phone due to a hearing impairment, and would not return PCH’s questionnaires – PCH kept sending her a large volume of sweepstakes mailings, and managed to extract more than $7,000 from her the following year.
- In early 2007 a Des Moines woman - Terri Golightly, who appeared at the Dec. 18 news conference with Attorney General Miller -- discovered that her cancer-stricken father-in-law was sending a substantial amount of money to PCH, thinking he had won or was about to win. She helped her father-in-law ship merchandise back to PCH for a refund. Sadly, this was not the first time around for this family. Twenty-five years ago Terri had to help her 92-year-old grandfather who was being victimized by PCH in the same way.
“These are not isolated examples,” Miller said, noting the figures that in 2006 more than 850 Iowans sent PCH more than $1,000 each in response to PCH sweepstakes mailings. Fifty Iowans sent more than $3,000 each to PCH last year, and their average age was 76, Miller said.
Tips for consumers – and adult relatives and caregivers for older Iowans:
Miller emphasized that buying magazines or merchandise does NOT affect one’s chance to win. “That’s a message that consumers need to take to heart,” he said. “Most of the big sweepstakes winners – the people who got the balloons and oversized check treatment from the prize patrol – did NOT order anything with their winning entries. Buying does not help you win – and chances are that the next big winner will be someone who decided not to place an order.”
PCH sends elderly “loyal customers” as many as about 130 solicitations a year – a rate of one every two to three days, Miller said. Almost every mailing is carefully crafted to convey false impressions, he said, including the impression that the consumer is close to winning big, and that the company’s appreciation for a large volume of merchandise orders can make the crucial difference.
“These insinuations are subtle, but very effective, said Miller. “They put many vulnerable people on an ordering treadmill, sending more and more money to the company in the false belief that they’ll get the money back, because the big cash prize is within reach.”
Miller also noted that many mailings imply that consumers will forfeit their favored position in the sweepstakes if they don’t respond to each mailing. The consumer worries that an earlier entry will be invalidated if he or she doesn’t keep up with each new mailing, but in fact the person ends up entering the same sweepstakes over and over again, Miller said. “A 100-year-old Iowa woman ended up with 216 entries for a single drawing, and spent a bundle in the process. She didn’t win, of course.”
Miller encouraged relatives, friends and care-givers to step in if they spotted warning signs that older Iowans may be vulnerable to sweepstakes solicitations, such as that the older person is receiving many sweepstakes mailings, receiving large volumes of magazines or other purchases (often unopened or unused), having a preoccupation with winning a major prize, or having difficulty paying bills or covering expenses because of income diverted to sweepstakes.
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