September 9, 2010 AG's offices settles with Publishers Clearing House By Andrew Clevenger Advertiser CHARLESTON, W.Va. -- Publishers Clearing House, which runs a well-known sweepstakes, has agreed to revise potentially confusing advertising in a new agreement with West Virginia Attorney General Darrell McGraw's office. The settlement revises a 2001 agreement reached with 33 states, including West Virginia, and the District of Columbia in which the Port Washington, N.Y.-based company agreed to refine its pitch to ensure that consumers don't think that buying merchandise will increase their chances of winning. Under the original agreement, the company was required to survey consumers who spent a certain amount to see if they were misled by Publisher Clearing House's advertising. "If a consumer was generally confused or disoriented by the solicitations, believed that buying would increase his or her chances of winning, or was making excessive purchases in relation to his or her needs, the company agreed to stop sending its mailings to that individual," a news release from the Attorney General's Office states. Since then, there have been allegations that the company might have violated the terms of that agreement, according to the court order approving the agreement filed in Kanawha Circuit Court on Thursday. "PCH denies it has violated the Consent Judgments and denies any liability or wrongdoing," the order states. The company did agree to revise the agreement by agreeing to greatly increase the number of consumers it surveys to make sure they understood that buying merchandise didn't increase the consumer's chances of winning, according to the news release. Publishers Clearing House also agreed to pay $3.5 million to reimburse the states for the cost of their investigation, the release states. In one case, a West Virginia man learned after his mother died that she had spent hundreds of dollars on merchandise while trying to win the sweepstakes, according to the release. "If you have a family member who is spending more money than he or she can afford on Publishers Clearing House sweepstakes, or who believes that buying merchandise will increase the chances of winning the big prize, send my office a written complaint and we can get the sweepstakes mailing stopped," McGraw said in a prepared statement. Consumers who want to get off of Publishers Clearing House's mailing list should write a letter to the Attorney General's Office, said senior assistant attorney general Charli Fulton. Anyone with concerns regarding the sweepstakes can contact the Consumer Protection Division online at www.wvago.gov or call the Consumer Protection Hotline at 1-800-368-8808. Reach Andrew Clevenger at acleven...@wvgazette.com or 304-348-1723. Colo. shares Publishers Clearing House DENVER Colorado is getting $320,000 in a multi-state settlement with Publishers Clearing House over allegations its mailings deceived consumers. The payout is Colorado's share of a $3.5 million settlement with 32 states. The settlement stems from allegations that Publishers Clearing House violated a 2001 agreement in which Publishers agreed to change its sweepstakes promotion practices. Under the settlement announced Thursday, the Port Washington, N.Y., company will need to further restrict certain kinds of through-the-mail promotions. The company also agreed to screen more of its customers to make sure they are not disoriented, are not making excessive purchases and are not under a misimpression that buying helps win a drawing. AG’s office announces deal with Publishers Clearing House Wilmington, Del. — Attorney General Beau Biden joined 31 states and the District of Columbia Monday in announcing an agreement with sweepstakes company Publishers Clearing House. The agreement comes after a multi-state investigation into the company raised concerns about deceptive trade practices, especially those targeted at low-income and elderly individuals. The agreement modifies the terms of a prior agreement reached with the company in 2001. That earlier agreement resolved states’ allegations that Publishers Clearing House engaged in deceptive marketing practices by mailing promotional materials designed to mislead customers into believing that purchases from the company would increase their odds of winning the sweepstakes. “There is no excuse for misleading vulnerable people into spending their hard-earned money,” said Biden. “The Delaware Department of Justice will continue to stand up for the rights of Delaware’s consumers against companies that would take advantage of them.” As a result of the current investigation, the states believe that Publishers Clearing House was not in full compliance with the 2001 agreement, and that consumers would still be confused by the nature and language of some of the company’s sweepstakes promotional mailings. The investigation also revealed that the marketing was directed toward elderly and low-income individuals. Today’s agreement includes stronger provisions and additional conditions to help ensure that consumers are not further misled or pushed to make purchases. The conditions include: n Changes to the entry/order form that make it clear no purchase is necessary. n Prohibiting the use of a customer’s initials, identifying numbers, or other personally identifying information on materials to make it appear as though recipients have a better chance of winning. n Implementing procedures to guard against duplicate magazine subscriptions. Publishers Clearing House agreed to pay $3.5 million to cover the cost of the states’ investigation. Delaware will receive $40,000 of that sum, which will go to the state’s Consumer Protection Fund. Copyright 2010 The Community News. Some rights reserved February 25, 2011 Sweepstakes 'winners' complain about charges from National Magazine Exchange By Ivan Penn, Times Staff Writer Consumers say calls about sweepstakes wins are resulting in big credit card charges. First come the mailings - about a million every week. We have been trying to reach you regarding your $2,100,000.00 sweepstakes. . . . Please call us at the above number. This is a free call. The 3- by 6-inch postcards typically land in mailboxes of people who have previously bought magazines or registered for sweepstakes, like Kenneth City resident Randall Benesch and Carl Grenier of Lowell, Mass. The postcards entice consumers to call an 800 number in hope of winning big cash prizes, like the $2.1 million a New York woman is said to have pocketed in June. Most consumers won't win a dime. But a call to the Largo-based National Magazine Exchange, known as the NME, or its affiliates could cost them a bundle. "They really socked my credit card," said Grenier, who says he was hit for $1,000 worth of magazine subscriptions. "They billed me for a five-year subscription when they never told me it was even one year." Grenier and Benesch complained to the Pinellas County Department of Justice and Consumer Services. They joined 589 other consumers who, over the past five years, have complained to that agency, the Better Business Bureau of West Florida Inc. in Clearwater or to the state Attorney General's Office. The complaints come from less than 1 percent of the thousands of people who phone the company's call center every week, said Julie Christman, marketing director for National Magazine Exchange and its affiliate ThinkDirect Marketing Inc. "Over the past three years, we have had approximately 14 million entrants into our sweepstakes, sold over 1 million subscriptions, and awarded $4.35 million in sweepstakes prizes," said Christman, whose more than 750-worker company ranks among the top 25 in Pinellas County in terms of employees. "As always, NME will continue to focus on customer satisfaction, and we are proud of our overall record," she said. But that record includes: • An ongoing investigation by the state Attorney General's Office of the 175 complaints the agency has received from consumers and employees about NME's sales tactics and employment practices. • Almost 400 complaints to the Better Business Bureau over the past 36 months involving allegations of high-pressure sales tactics, failure to deliver products requested and trouble canceling sales. • More than two dozen complaints to the Pinellas County Department of Justice and Consumer Services with similar allegations. • A class-action lawsuit filed against NME last year in U.S. District Court in Tampa. It includes more than 250 current and former employees who say the company docked their pay when they were away from their computers for more than 30 seconds. (See story below.) • A $535,000 fine paid in 2004 after the Federal Trade Commission accused the company of "engaging in unfair or deceptive acts or practices." • $30,000 in fines levied against the company in 2001 after attorneys general in Florida and Oregon cited the company for deceptive business practices. Christman says the company does not discuss ongoing litigation, and previous problems were resolved when new chief executive officer Dennis A. Cahill took over in 2008. The company says it works to minimize consumer unhappiness by restricting what call center workers can say to potential customers. "We're a very highly script-written environment," said Harold W. Hale Jr., the company's chief financial officer. "It's 'stick to the script.' We don't tolerate deviation from the script." • • • Here's how it works: Hale says the company mails postcards that prompt consumers to call for a chance to win a sweepstakes. The 1 million pieces of marketing mail sent out each week yield about 150,000 responses to the call center at 8285 Bryan Dairy Road in Largo, Hale says. Callers are offered magazine subscriptions, DVDs or memberships in buying and discount clubs. Of those 150,000 callers, Hale says, about 10 percent, or 15,000, make a purchase. Consumer experts say use of the mail solicitations is a method telemarketers employ to get around the Do Not Call list. Instead of calling the consumer, the marketer persuades potential customers to call them. • • • Randall Benesch, the Kenneth City resident, said his sales person pushed him to buy magazine subscriptions even though he had no money. "I told them I don't have any money to buy the magazines," Benesch said. "I just wanted to enter the contest." But the sales person pressed him all the more, saying they could charge him later. "They were going to give me a vacation somewhere, here in Florida somewhere," Benesch said. "I said, 'I don't have the money to do it with.' They said, 'You mean you don't want to go on a paid vacation?' " Then they also offered him a $40 Walmart gift card. But when he finally gave in to the pressure and gave his debit card information, the $68 charge did not go through. "I didn't have any funds," Benesch said. And he didn't get his free vacation or Walmart card. "I never received any of it," he said. "All of it to me was just a scheme." • • • Grenier says he never intended to buy magazines. He just wanted to see what he had won. Grenier was hit with more than $1,000 in credit card charges for what he thought was a trial offer of magazines. It turned out that the company charged his credit card for 12 magazine subscriptions with five years' worth of renewals. After Grenier complained, the company refused to refund his money. "Basically, they told me to go to hell. . . . I'm not a rich man, you know what I mean?" Grenier contacted the Pinellas County Department of Justice and Consumer Services to file a complaint. His was a story all too familiar to the investigators. "They wanted to cancel, and they were having problems doing that," said Deborah Berry of the Pinellas consumer protection agency. Over the past three years, complaints from consumers in every state but Vermont have poured into Pinellas consumer protection and the Better Business Bureau of West Florida Inc., which handles national complaints about National Magazine Exchange. "Consumers have complained that they were billed for magazine subscriptions that they didn't order," said John Zajac, a spokesman for the Better Business Bureau. "Additionally, we've received complaints about the company's sales practices, including misrepresentation and high-pressure phone calls." • • • NME announced plans in January to hire 350 new workers to help fill its expanded facilities in Largo. The expansion will bring the number of employees to about 1,100 workers in 100,000 square feet of space. The company began in Largo under William Hood, a past president and director who incorporated the business in 1985 under the name Special Data Processing. Four years later, Hood incorporated National Magazine Exchange, operating the business under both names. The company would run operations under several names, all tied to National Magazine Exchange, including Agora Marketing Solutions Inc., NME, National List Exchange, National Clearing Exchange, Clearinghouse Magazine, Strike It Rich 2 Sweepstakes and ThinkDirect Marketing Inc. Though it set up operations similar to Publishers Clearing House, the companies are not related. In April 1995, the company made its first public announcement about plans to expand its operations. Special Data Processing Inc., said it would move into a building near Tri-City Plaza in Clearwater and add 135 workers to its 700 existing employees. Five years later, mounting complaints from consumers across the United States led to the first in a series of enforcement actions by federal and state authorities. Christman says investigations or issues raised by consumer watchdogs are a thing of the past. "We are eager and happy to work with the Better Business Bureau and other consumer organizations to discuss how we do business, and resolve any and all complaints we receive," Christman said. Benesch said he wishes the company responded to him with that level of concern. "I think the attorney general of the state of Florida ought to look into all of this," Benesch said. "I learned a big lesson from all of this." Times researcher Shirl Kennedy contributed to this report. Ivan Penn can be reached at ipenn@sptimes.com or (727) 892-2332. Follow him on Twitter at twitter.com/Consumers_Edge and find the Consumer's Edge on Facebook.