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July 11, 2002

Miller: Sweepstakes Victims Will Receive Almost $1 Million in Refunds

Payments of $952,000 will go to older Iowans the Attorney General says were deceived by misleading sweepstakes solicitations.

DES MOINES.   Attorney General Tom Miller said Thursday that $952,397 will be reimbursed to older Iowans who were misled by sweepstakes mailings into believing they had won or were very close to winning huge sweepstakes prizes - and that making a purchase would enhance their chances of winning.

"We alleged that those two key misrepresentations were made in repeated mailings to targeted, vulnerable older Iowans, and that the result was thousands of Iowans losing thousands of dollars apiece to deceptive sweepstakes," Miller said. "This really harmed many older Iowans."

Miller said that $500,000 in refunds will come from the United States Purchasing Exchange sweepstakes (USPE), and $452,397.80 from sweepstakes giant Publishers Clearing House. The USPE payment results from a settlement Iowa reached last week with USPE, which has gone out of business after many years as one of the nation's largest sweepstakes-by-mail marketers. The Publishers Clearing House refund moneys were received recently as part of scheduled payments included in a settlement Iowa and other states reached last year with PCH. Publishers Clearing House remains in operation - but with numerous consumer protection reforms required by the multi-state case settlement.

"This is another milestone in a concerted campaign we have waged for over five years against deceptive sweepstakes," Miller said. "The sweepstakes industry has been forced to make significant changes as a result of enforcement efforts by Iowa and other states, but consumers still need to remember that their odds of winning are extremely low and that making a purchase will not improve those odds. Adult children or other care-givers also need to continue to watch out for older parents or others who still could be misled into wasting thousands of dollars on sweepstakes purchases."

Refund Checks

Refunds checks are expected to be issued in sixty to ninety days. Iowans do not need to contact the Attorney General's Office because customer lists already have been provided by the two sweepstakes companies. Refunds will be graduated so that Iowans with the most severe losses will be refunded 20% of what they spent. Refunds generally will go to Iowans with sweepstakes losses of $2000 or more in a single recent year. For example, elderly PCH customers who sent the company between $15,650 and $33,500 over a five-year period will receive refunds ranging from $3,130 to $6,700 (20%). Persons with lower losses will be refunded a lower percentage, 15, 10 or 5%. About 650 PCH customers will receive refunds totaling over $450,000. Detailed calculations are being run now to determine refunds totaling $500,000 for USPE customers.

Changes in the Sweepstakes Industry

Miller said three long-time sweepstakes companies have ceased business altogether - United States Purchasing Exchange, Michigan Bulb, and American Family Publishers or AFP. AFP, which was promoted for years by Ed McMahon and Dick Clark, filed for bankruptcy and ended its mailings after legal action by Iowa and other states. In the settlement reached with Miller's office last week, USPE also agreed to a battery of consumer protection reforms or "injunctive relief" prohibiting various unfair and deceptive practices - just in case it should go back into business.

Publishers Clearing House continues to operate, but under various injunctive terms or requirements in its settlements with Iowa and other states. Some of the injunctive terms of Iowa's settlement include that every sweepstakes solicitation must include several key fact messages, including "You have not yet won," "Enter for free," and "Buying won't help you win." PCH shall not misrepresent that the "Prize Patrol" is coming or that a person is receiving special attention by using documents such as simulated press releases or asking for information about the person's whereabouts when a prize is to be awarded. The detailed settlements include many more similar requirements designed to avoid deception and misunderstanding in sweepstakes solicitations.

"But we can't let our guard down," Miller said. "We are watching this closely as law-enforcers, and consumers must still be vigilant, too. This industry has been a troubled one for many years, and close monitoring still is needed to make sure that we get compliance with our injunctions, and to make sure that the victimization of elderly customers has ended." Miller said that his office examines PCH's sweepstakes mailings to gauge compliance.

The role of adult children and care-givers

"Adult children and other care-givers have been extremely important to us in tackling this problem," Miller said. "They have helped us identify parents and other older Iowans whose bank accounts and life-savings were quickly pouring away into the hands of questionable sweepstakes."

Miller said his office still is interested in hearing about situations if an Iowan is spending large sums in response to PCH solicitations or other sweepstakes mailings. Iowans with such information should contact the Consumer Protection Division at (515) 281-5926.

At news conferences in Des Moines and Cedar Rapids, Miller was joined by Iowans whose parents had lost enormous sums to deceptive sweepstakes. Dave Linquist appeared with Miller in Des Moines, and Bruce and Christina Randall joined him in Cedar Rapids. Their parents' homes both were packed with magazines and merchandise they purchased - books, jewelry, videotapes, CDs and knick-knacks -- thinking they were winners or very close to winning huge sweepstakes prizes.

Bruce Randall's mother lost over $100,000 to sweepstakes companies. She often told relatives she was convinced she was going to win and she waited many times for the PCH Prize Patrol. Through the work of Bruce Randall and the Attorney General's Office, about $80-90,000 of his mother's losses were recovered from the sweepstakes companies.

"A disaster for some older Iowans and their families."

"We know of people who postponed returning to Iowa from their winter home in Arizona because they believed the Prize Patrol was coming," Miller said. "We know of people who believed that highly customized mailings meant they were the winners. We know of people who spent thousands of dollars thinking they were winners or very close to winning and that they had to buy products to guarantee or enhance their chance of winning," he said.

"Such vulnerable Iowans sometimes were targeted for almost constant sweepstakes solicitations. Now companies are required to remove such people from their lists," he said.

"We know of one Iowan who received so many solicitations in a year that it meant one came almost every day the mail was delivered," he said.

"This was a disaster for some older Iowans and their families," Miller said.

"We are very pleased to be able to return substantial sums to hundreds of Iowans who lost the most, and we are resolved to remain vigilant and active in thwarting sweepstakes abuse."

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