A multi-state settlement has required mega-sweeps mailer United States Purchasing Exchange to make dramatic changes in what it tells consumers and pay more than $30 million in restitution, California Attorney General Bill Lockyer said yesterday.
The AG’s office said that California, 47 other states and the District of Columbia reached the settlement with United States Sales Corp. of Northridge, CA, which does business as United States Purchasing Exchange and USPE.
Each year, USPE sends out tens of millions of direct mail nationwide that contain a sweepstakes entry form and sales offers for household and personal products. Consumers, particularly older people, have purchased those products believing their chances of winning the sweepstakes would be enhanced, the AG’s office said.
Under the settlement, USPE has agreed to include clear and conspicuous disclosures of “Sweepstakes Facts” for consumers who receive mailings. The facts will include a statement that the consumer has not yet won; that buying products will not help the consumer win the sweepstakes; that the consumer doesn’t have to buy anything to enter the sweepstakes; and the odds of winning a prize.
In addition to consumer disclosures, the assurance of voluntary compliance signed by USPE and the state AG establishes a fund of $30.4 million for restitution to consumers nationwide who spent at least $1,870 with USPE in any one of calendar years 1997, 1998 or 1999. Consumers eligible for a refund will be notified by mail in the early fall. USPE will pay the states more than $1.3 million for the costs of the investigation and has set aside another $3.6 million for the cost of administering the consumer restitution program.
In addition, USPE, to stop unnecessary purchases by high activity customers, has agreed to discontinue sweepstakes mailings to any person who makes 25 purchases or spends more than $935 in a 12-month period. The company will also immediately stop mailing sweepstakes opportunities to anyone who in the past 12 months has purchase more than $2.500 worth of products.
The AG’s office said the settlement is the first reached with the multi-state group of Attorneys General since hearings into sweepstakes activities were held last year.
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