NEWS RELEASE
Office of Maryland Attorney General J. Joseph Curran, Jr.

June 26, 2001

Media Inquiries: Sean Caine 410-576-6357

MARYLAND, 25 OTHER STATES REACH UNPRECEDENTED $34 MILLION SETTLEMENT WITH PUBLISHERS CLEARING HOUSE

Baltimore - Attorney General J. Joseph Curran, Jr. announced today that sweepstakes giant Publishers Clearing House (PCH) will pay $34 million — including restitution to thousands of consumers — and will make significant and permanent reforms in the way it conducts its future contests, under a groundbreaking agreement with his Consumer Protection Division and those of 25 other states. The agreement must still be approved by the courts of Maryland and the other settling states.

The $34 million settlement and permanent injunction will resolve allegations made by Curran’s office and other states that consumers often were misled by PCH mailings into believing they had won contests or that making purchases would enhance their chances of winning. While the states settling with PCH have not yet determined how the restitution payments will be distributed, if based upon the state’s population figures, Maryland consumers would receive $675,736 in restitution. Consumers who are eligible for restitution will be contacted at a future date.

"Too many people spend thousands of dollars they can ill afford because sweepstakes mailings create a false hope they are about to become millionaires," Curran said. "This settlement will not only return some of that money to deceived consumers, but will help prevent consumers from being similarly deceived in the future," he added.

Curran added that today’s settlement addresses concerns that led his office and the other 25 states to reject an earlier multi-state settlement with PCH reached last summer. Curran said the settlement includes several first-ever concessions from PCH, including:

• A provision that prohibits PCH from making any false statement, no matter how small or seemingly insignificant. In addition to this far-reaching prohibition, the settlement puts in place strict prohibitions against misleading or deceptive statements or omissions and, for the first time, prohibits PCH from implying, by any means whatsoever, anything that they are prohibited from stating directly.
• Prohibiting PCH from discriminating between consumers who order and those who do not. From now on, PCH may only use a single contest entry form, to be used by all consumers whether they order products from PCH or not. In the past, customers who did not buy magazines or other products were forced to search for a small, plain entry card among the various colorful pieces PCH included with the contest solicitation. This practice — now ended forever — led consumers inevitably to conclude that those who ordered had a better chance to win than those who did not.
• An acknowledgment — for the first time ever — from PCH of the harm done in the past by its deceptive practices, and an apology for that harm.
• Increased safeguards to protect vulnerable PCH customers who may continue to be confused about whether buying products has any impact on their chances of winning.

In addition to the changes in its future business practices, PCH agreed to pay restitution totaling $19 million for customers who were deceived by its past practices. PCH also will pay, for the first time, civil penalties totaling $1 million, as well as $14 million to cover the costs associated with the states’ litigation, the costs of administering the restitution payments, and for consumer education.

The agreement with PCH is also being entered into by the Attorneys General of Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, North Carolina, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, West Virginia and Wisconsin.

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