Class Action Lawsuit Filed Against PCH Relating To Sweepstakes Marketing Practices

Publishers Clearinghouse, the magazine marketer whose sweepstakes promotions have become a household name, was recently sued in federal court in New York relating to its sweepstakes marketing practices. The complaint alleges on behalf of a putative class that PCH enticed and solicited consumers, particularly the elderly, into believing that they have enhanced opportunities of winning millions of dollars in sweepstakes by engaging in unlawful, unfair and deceptive marketing practices that include direct mail, private membership solicitations, internet advertisements, and email marketing campaigns, which promised winnings to Plaintiffs, thus, enticing them to purchase goods and to provide extensive personal information, from which PCH profited by re-marketing the personal information to other marketers. 

PCH is a nationally recognized sweepstakes and marketing brand known especially for its multi-million dollar sweepstakes. The company rose to prominence in the 1980’s when celebrity Ed McMahon endorsed the sweepstakes and television advertisements portrayed unwitting consumers answering their doorbell to the Publishers Clearing House “Prize Patrol” surprising consumers with flowers and ribbons and announcing they had won the Sweepstakes.

PCH is no stranger to litigation over its practices as its marketing practices have often come under scrutiny over the years. In 1994, 2000, 2001 and 2010, PCH settled matters brought by various State Attorneys General for deceptive practices, paying tens of millions of dollars and agreeing to refrain from prohibited marketing practices. Furthermore, in 1999 and 2015, the United States Senate conducted examinations into PCH’s marketing practices. 

Plaintiffs, on behalf of a putative class, have asserted claims for deceptive advertising of its sweepstakes promotions. The complaint challenges PCH’s marketing practices in a variety of channels – including direct mail and digital.  Plaintiffs’ claims include alleged violations of the Deceptive Mail Prevention & Enforcement Act, the Can Spam Act, New York General Business Law §§ 349 and 369(e). 

The complaint alleges that PCH’s current marketing practices violate its agreements with the State Attorneys General from the prior 2001 and 2010 settlements. The complaint further alleges, among other things, that PCH’s business model is to repeatedly obtain consumers’ personal information with the goal to sell merchandise to them and to re-market their online behavior and personal information and that it uses deceptive and misleading print and digital advertisements to entice consumers to use their website and purchase products based on representations those purchases will enhance their chances of winning prizes and drawings.   

Takeaway: The case illustrates how important it is for marketers to continually review their marketing materials given the evolving compliance landscape. Given the strength and notoriety of the PCH brand, it will be interesting to see the outcome of this case and what effects, if any, it will have on the sweepstakes industry and laws relating thereto. 

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