Publishers Clearing House has agreed to reform its practices when marketing sweepstakes to elderly people in Iowa.
In a deal with Iowa Attorney General Tom Miller, PCH agreed to pay a $2,500 penalty each time it mails someone who has been removed from its mailing list. And it can no longer sell the names of high-spending customers to other sweepstakes operators.
Miller said in a statement that older people are spending inordinate amounts of money buying magazines and merchandise advertised in the sweeps mailings thinking they will improve their chances of winning a big prize.
In connection with the settlement, PCH has refunded more than $60,000 to the elderly, including some refunds totaling more than $10,000, the AG office said.
“Last year alone, more than 850 Iowans spent PCH more than $1,000 each in response to sweepstakes mailings, and 50 spent more than $3,000 each, with an average age of 76,” he said.
According to a “letter of understanding,” PCH must reform a number of its practices including identifying $500 spenders on a quarterly basis and attempting to determine those person’s ages.
If deemed age 65 or older PCH must attempt to survey that person by phone to determine if they “truly understand” that buying doesn’t improve their chances of winning or they must stop mailing that person.
If the person is not suppressed from the mailing file, the person’s contact information and age must be provided to the AG’s office and the AG may require that that person not receive mailings.
The move comes following decades of complaints from friends and relatives angry and upset that PCH is taking advantage of elderly people.
“This company has a terrible track record of exploiting the elderly, and it has to stop,” Miller said.
Executives at PCH could not be reached last night.
PCH is required to monitor magazine subscription purchases to identify elderly people who buy subscriptions that extend years into the future, again, hoping to improve their chances of hitting the big jackpot.
In addition, PCH must sent a letter to Iowans who have spend more than $1,000 in a year explaining that buying does not improve their chances of winning.
“This will now stop,” Miller said. “This company has drained the retirement funds of too many older Iowans.”
PCH and now defunct American Family Publishers caught the attention of legislators for similar practices over 10 years ago.
A large-scale investigation began under then Florida Attorney General Bob Butterworth, which led to the enactment of the Deceptive Mail Prevention and Enforcement Act in 1999 to regulate sweepstakes mailings precisely because many elderly people thought their only chance of winning was to make purchases.
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