The lawsuit from the Federal Trade Commission against Publishers Clearing House says consumers spent money and wasted their time and demanded that PCH make substantial changes to how it conducts business online.
Publishers Clearing House agreed to pay $18.5 million for "deceptive and unfair" sweepstakes practices and change several of its business tactics, the Federal Trade Commission said in a news release Tuesday.
A lawsuit from by the Federal Trade Commission against Publishers Clearing House alleged consumers spent money and wasted their time and demanded that PCH make substantial changes to how it conducts business online.
In the complaint, obtained by Inside Edition Digital, the Federal Trade Commission claimed Publishers Clearing House uses “dark patterns” to mislead consumers about how to enter the company’s sweepstakes drawings and made them believe that a purchase is necessary to win or would increase their chances of winning, and that their sweepstakes entries are incomplete even when they are not.
The FTC also alleged the company added surprise shipping and handling fees to the costs of products, misrepresented that ordering is “risk free,” used deceptive emails as part of its marketing campaign, and misrepresented its policies on selling users’ personal data to third parties prior to January 2019.
Many consumers affected by these practices are older and lower-income, CBS News reported.
Following the announcement, Samuel Levine, the director of the FTC's Bureau of Consumer Protection, said in a statement that “today’s action requiring PCH to overhaul its user interface, compensate consumers for lost time, and stop surprise fees should send a clear message that manipulative design techniques are a no-go under our laws.”
“This is our second dark pattern lawsuit over the last week. Firms that continue to deploy deceptive design techniques are on notice,” he added.
FTC Chair Lina Khan and commissioners also released a statement, saying, “today's action builds on previous efforts to crack down on companies that use illegal dark patterns to fuel digital deception and harm consumers.
The $18.5 million settlement will be used to refund consumers and implement promised changes to Publishers Clearing House's business practices, CBS News reported.
Publishers Clearing House has also agreed to make changes, which include making clear disclosures on their sweepstake entry web pages, stopping surprise fees and shipping charges and stopping deceptive emails, court documents filed by the FTC said.
Inside Edition Digital has reached out to Publishers Clearing House for comment and in a lengthy statement they said, "We are confident that the provisions in this settlement regarding our online shopping experience will go even further in setting unparalleled standards for clarity and transparency that have allowed PCH to be a welcomed brand into American households since 1953."
In the statement to Inside Edition Digital, Christopher Irving, PCH’s Vice President for Consumer and Legal Affairs stated: “While the FTC raised questions about the understanding of the well-known no purchase necessary messages in our ecommerce promotions, the facts demonstrate consumers fully grasp this important rule. Far from being what the FTC calls a ‘dark pattern,’ on any given day, roughly 98% of consumers who browse PCH’s value driven merchandise offerings and enter do so without buying anything. And the majority of our millionaire winners never ordered with their winning entries. We really mean it when we say No Purchase is Necessary!”
“While we disagree with the FTC’s assertions and have admitted no wrongdoing, we agreed to settle this matter in order to avoid the ongoing expense and distraction of litigation," he added. “We can now put all our focus continuing what we do best: Providing consumers exciting free-to-play entertainment and games where we have awarded over $578 million in major prizes since 1967. In fact, just this week the famous PCH Prize Patrol will be awarding our next life-changing prize to one lucky winner. We are proud of our tradition of awarding not only our million-dollar prizes, but of our ongoing philanthropy with over 40 percent of profits to charitable foundations and contributions to organizations including more than $1 Million Dollars to St. Jude’s Children’s Research Hospital.
PCH also said that "Consumers should know that the integrity of our sweepstakes prizes and awards was never questioned."
