U.S.

Publishers Clearing House Settles

By Dan Collins

June 26, 2001 / 1:24 PM EDT / CBS

Publishers Clearing House is cutting a $34 million check but you can bet this one won't be delivered by the prize patrol.

"This industry giant has made its money by saying to people you're a winner, today PCH is a loser," said Missouri's Attorney General Jay Nixon.

PCH,Publishers Clearing House, announced Tuesday that it has agreed to pay the whopping sum to 26 states to settle all remaining allegations it used deceptive sweepstakes promotions to sell magazines.

The agreement comes 10 months after the company, one of the largest U.S. magazine subscription agencies, settled with the other 24 states and the District of Columbia for $18 million.

Under the accord, Publishers Clearing House agreed not to make false, deceptive or misleading statements to consumers who were lured into buying merchandise because they believed it would increase their chances of winning a sweepstakes.

And, reports CBS News Correspondent Cynthia Bowers, it can no longer send personalized letters like it did to 79-year-old Bill Koehler, who got several from a supposed PCH employee named Robert Treller, a fellow World War II veteran who urged him to buy a history of air combat. Only trouble is Robert Treller doesn't exist. And Koehler doubts his refund check does.

"I won't believe it until I see it in black and white. Promises don't mean nothing."

Wisconsin was the first state to take Publishers to trial, largely to protect people like Bill Koehler, arguing the company unfairly targets the elderly. Publishers denies that and it settled in order to get bad times behind it.

Highlights of the Agreement

Click here to read highlights of the deal Publishers Clearing House made with 26 states.

The company, which has been in business for 47 years, will no longer use simulated checks to suggest a consumer is an imminent winner and instead must stress that sweepstake entrants have not yet won. It must also tell consumers they need not buy magazines in order to win.

"This settlement will allow PCH to move forward doing what we do best - serving millions of satisfied customers and awarding millions of dollars to people all over the U.S." said Robin Smith, chairman and chief executive officer.

"We listened to the states' concerns and have agreed to responsive and significant changes that will make our pomotions the clearest, most reliable and trustworthy in the industry."

Deborah Holland, executive vice president, said entries for the $1 million prize to be awarded Aug. 23 were in the mail. "The fact that the company faithfully awards its prizes has never been in doubt," she said.

In a statement, Wisconsin Attorney General James Doyle said the $34 million settlement included $19 million for consumer restitution, $14 million in costs and attorneys' fees and $1 million in civil penalties.

He said because of Wisconsin's lead role as the only state to take its case to trial, the state would receive approximately $2 million of the total settlement.

The states involved in the settlement were: Arkansas, Arizona, Colorado, Connecticut, Delaware, Florida, Iowa, Indiana, Kansas, Kentucky, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, North Carolina, New Jersey, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Wisconsin and West Virginia.

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