Consumer News Release
For immediate release -- Wednesday, September 1, 1999.
Contact Bob Brammer -- 515-281-6699
Miller Questions Publishers Clearing House Class Action Settlement
"We have serious questions about this settlement," Miller says. "It doesn't provide serious restitution, it doesn't significantly change PCH practices, and it may undercut people's legal rights."
DES MOINES-- Attorney General Tom Miller said today that a class action settlement offer from Publishers Clearing House appears to provide very little money to compensate consumers who may have been misled by PCH's sweepstakes promotions.
"Our best guess is that this proposal would provide only pennies on the dollar, and that it would be complicated for consumers to recover any money at all," Miller said. Miller's Office is investigating PCH regarding possible violations of the Iowa Consumer Fraud Act.
Miller said thousands of Iowans have been receiving a mailing in recent days called a "Notice of Class Action, Proposed Settlement and Final Fairness Hearing." He emphasized the class action is separate and apart from any action by the State of Iowa or other states.
The class action notice outlines a proposed settlement reached between attorneys for Publishers Clearing House and private attorneys based in Illinois who represent a group of consumers who received mail from PCH between 1992 and 1999. The class action suit is pending in federal district court in East Saint Louis, Illinois.
"We believe that tens of thousands of Iowans are receiving the mailing, even if they never made purchases from PCH and only received solicitations," Miller said. "The mailing is sparking lots of confusion and questions."
Miller voiced several concerns about the class action and mailing:
Payment to consumers. The settlement calls for PCH to pay a maximum of $10 million, with as much as $3 million of that for attorney fees and another $3 million for administration of the agreement and other costs. "That may leave only pennies on the dollar for consumers -- who have spent more than $1 billion on PCH merchandise since 1992," Miller said. "It has every appearance of being a good deal for PCH and the class action attorneys, and a bad deal for consumers."
"Opt-out provisions." The mailing's densely worded, fine-print legal notice says consumers must opt out of the class action settlement if they don't want to be a part of it, but they must do so in writing by October 18. Miller said consumers must make their own decision, but he encouraged them to consider opting out -- especially if they had lost a lot of money in payments to PCH. He said people may contact his office for an opt-out form. Iowans who made few or no purchases from PCH probably are little affected by the class action settlement, Miller said.
Fairness of the class action settlement. Miller said he and his staff are exploring whether it is possible to challenge the class action settlement in the federal court, or to ask the court to exempt Iowa residents from the agreement.
Effect of the settlement on PCH practices. "We have serious concerns about PCH's practices, but this agreement does little to change them," Miller said.
Miller said the Consumer Protection Division of his office is investigating possible violations of the Iowa Consumer Fraud Act by PCH. "We are concerned that PCH mailings may be deceptive in that many consumers may be misled to believe that they already are very close to winning a huge prize, and that making a purchase is either necessary or helpful to their winning the prize."
Miller encouraged Iowans to contact his office if they or a family member has suffered big losses to Publishers Clearing House or other sweepstakes.
"We are particularly concerned that PCH may target older citizens with frequent, personalized mailings that tend to deceive them," Miller said. "Our investigation is continuing."
Miller also said there are several cardinal points Iowans should remember about sweepstakes offers: "Don't be misled into thinking you have won or that you are very close to winning -- in reality, sweepstakes notices are issued by the millions, and the chances of winning are usually no better than one in 100 million. A purchase does not increase the chance of winning. Be aware that many older Iowans have lost thousands of dollars to sweepstakes. Contact the Attorney General's Consumer Protection Division at 515-281-5926 if you would like help."
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