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Suckered By Sweepstakes?

The companies that mail sweepstakes contests to millions of Americans told disbelieving senators Tuesday that the rules of those contests are clearly stated and that their mailings do not deceive consumers.

Members of a Senate panel reacted to the testimony with anger, reading sweepstakes industry witnesses their own mailings with headlines such as "Open your door to $31 million on Jan. 31" and "It's down to a 2 person race for $11 million."

Representatives of Publisher's Clearing House, Reader's Digest, American Family Enterprises, and Time defended their practices, contending that they have voluntarily changed their mailings and are making efforts to identify the small segment of Americans who don't understand the rules.

Sen. Susan Collins, R-Maine, and chairwoman of the Senate permanent subcommittee on investigations, said she was "absolutely stunned" by company statements that no "reasonable person" would be misled by headlines that appear to declare someone a sweepstakes winner.

Collins was especially critical of a Publisher's Clearing House letter that quoted two company officials discussing how they could get a valued customer, Eustace Hall, a prize.

"There must be something we can do . . ." the letter said.

Hall, who appeared before the committee Monday in its investigation of deceptive sweepstakes, broke down in tears during his appearance and told the panel that he thought the letter was a personal one.

Deborah Holland, senior vice president of Publisher's Clearing House, said the letter was sent to nine million people, naming each of the individual recipients, and was "perfectly fine."

Sen. Carl Levin, D-Mich., told Ms. Holland, "you lied to a customer" by telling Hall in the letter that there was a conversation about him. That letter is perfectly a lie . . . purposefully false . . . purposely misleading, purposely deceptive," said Levin.

"The point of our mailings is not to convince people they've won a sweepstakes, but rather to be excited about the possibility of winning and to consider our products," Naomi Bernstein, vice president of marketing services for American Family Enterprises, said in written testimony.

CBS News This Morning Consumer Correspondent Herb Weisbaum reported Tuesday that some consumers, particularly the elderly, don't understand the contests' rules and purchase products thinking that they will increase their chance of winning.

Ninety-two-year-old Lillian Holliday has drawers full of sweepstakes mailings, and her southern California apartment is filled with piles of magazines, Weisbaum reports. When asked if she thinks buying magazines helps to increase her chances of winning, Lillian said, "That's right... The way it's worded, it says 'no purchase necessary.' But you know and I know that if you don't purchase, you get nothing, and if you do purchase, you might get soething."

Company representatives have hired some of Washington's top lobbying firms to convince lawmakers that they have voluntarily changed their mailings. They contend they have taken vulnerable individuals off their mailing lists, clearly state the odds of winning and leave no doubt that purchasers and those buying nothing have equal chances to win.

Peter Davenport, senior vice president of The Reader's Digest Association, said in his written statement that a study of purchasing habits by his company "strongly indicates that the vast majority of RDA's customers understand . . . that no purchase is necessary to enter."

Ms. Bernstein said that her company, better known as American Family Publishers, "does not target any demographic groups, nor do we collect demographic information."

By Herb Weisbaum
CBS Worldwide Corp. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report