Topline
Publishers Clearing House will refund customers $18.5 million to settle a Federal Trade Commission lawsuit alleging deceptive business practices—familiar ground for the marketing and sweepstakes firm.
The exterior of the Publishers Clearing House offices in Jericho, New York on January 30, 2019. … [+]
Key Facts
The FTC alleged Publishers Clearing House tricked customers into making purchases by using “dark patterns”—design practices that manipulate consumers into making potentially harmful or uninformed decisions.
Specifically, the FTC claimed the company used deceptive website design to convince consumers that making purchases was required to either win a sweepstakes or increase their chances of winning one.
The FTC also claimed Publishers Clearing House tacked on surprise shipping fees to purchases—something the company will have to stop under the terms of the settlement.
In addition to the $18.5 million being refunded to customers, Publishers Clearing House will also have to display clear disclosures on its website that inform customers their purchases are not needed to win or increase their chances of winning a sweepstakes.
Publishers Clearing House did not immediately respond to a request for comment.
Key Background
The FTC lawsuit is not the first time Publishers Clearing House has dealt with litigation regarding their business practices. In 2000, a $30 million settlement was approved for a class-action lawsuit that claimed the company misled customers into buying magazines—purchases made with the belief it would increase their chances of winning a sweepstakes. The federal judge who approved the settlement said as much as $21 million would be paid in claims and that claimants would get full refunds of what they paid to the company. Publishers Clearing House also paid $18 million in a settlement from the same year that also alleged customers were misled into thinking their purchases of merchandise would increase their chances of winning a sweepstakes. In 2018, similar allegations were filed against the company in a class-action lawsuit that also claimed that Publishers Clearing House was selling consumers’ personal information.
Tangent
Scams using the Publishers Clearing House name have gained significant attention from government entities. The FTC and the U.S. Postal Service have both published alerts informing consumers about signs of scams using Publishers Clearing House’s name. The non-governmental Identity Theft Resource Center identified a 240% increase last year in scams pretending to represent PCH.
Further Reading
Publishers Clearing House to refund customers $18.5 million in FTC settlement for ‘deceptive’ practices (CNBC)
Publishers Clearing House settles with US for $18.5 million for misleading consumers (Reuters)
Source: https://www.forbes.com/sites/antoniopequenoiv/2023/06/26/publishers-clearing-house-refunding-185-million-in-misleading-business-practices-suit-settlement-one-of-a-few-the-sweepstakes-company-has-faced/