American Family Enterprises, parent company of sweepstakes mailer American Family Publishers, filed for Chapter 11 bankruptcy protection late last month. The firm hopes to protect itself from the effects of settling dozens of class-action lawsuits for alleged deceptive advertising. “In light of AFP’s financial situation, we felt it was critical to make adequate provision for those customers who may have been misled by the company’s sweepstakes promotions,” said Guy Burns, a San Francisco-based attorney for the firm. The company, best known for its television pitchmen, Ed McMahon and Dick Clark, uses direct mail sweepstakes to sell magazine subscriptions. AFE is owned by TAF Holdings Inc., a subsidiary of Time Inc., New York, and a group of investors. Neither the settlement nor the bankruptcy court filing will have an effect on its ongoing sweepstakes promotions or previous lawsuit settlements, according to Susan Caughman, AFE’s president and CEO. “All monies for AFE’s contests! have been prefunded and are hel d in trust by federally insured independent financial institutions until the award date,” Caughman said. The company, which reportedly will award $1 million on Nov. 14 and $10 million on Jan. 31 to sweepstakes entrants, has been in the center of controversy for more than a year, having been sued by various states for alleged deceptive advertising. Last year the firm reached a $1.25 million settlement with authorities in 40 states and agreed to improve the accuracy of its direct mail sweepstakes promotional materials.
Network
