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Consumer News Release

For immediate release -- Wednesday, January 26, 2000.
Contact Bob Brammer -- 515-281-6699

Miller Asks Court to Order Publishers Clearing House to Cooperate with Investigation or Stop Operation in Iowa

Attorney General's concern: whether older Iowans have false belief that making a purchase improves their chance of winning a sweepstakes --and whether mailings mislead Iowans.

DES MOINES-- Attorney General Tom Miller filed an action today in Polk County District Court alleging that Publishers Clearing House has impeded a Consumer Protection Division investigation of the sweepstakes company's solicitations and their effect on elderly Iowans.

"We are asking the Court to order Publishers Clearing House to comply with our lawful investigation -- or to prohibit the company from doing business in Iowa if it fails to comply," Miller said.

"Many elderly Iowans have responded to PCH solicitations by spending thousands of dollars a year for magazines and other merchandise that often end up piled in a person's home, unopened and unused," Miller said.

"Our concern and our investigation focuses on whether Publishers Clearing House solicitations have deceived people and led them to false beliefs - namely, that they were specially positioned to win the sweepstakes, that PCH officials were personally interested in making them winners, and that buying more merchandise would help them win the jackpot," Miller said.

"I want to emphasize to consumers that buying does not increase one's chance of winning at all, and that your chances of winning probably are about one in 50 million," Miller said, citing a figure in the fine print of a PCH solicitation.

Miller said his office has been grappling back and forth with Publishers Clearing House for months over the company's response to a formal "Civil Investigative Demand" issued by his office under authority of the Iowa Consumer Fraud Act.

"Our court action alleges PCH has impeded this investigation through delays and incomplete responses, by their failure to follow through on express commitments to provide responsive information and materials, by their refusal to swear to the completeness and responsiveness of the information provided, and by their refusal to explain the disappearance of responsive documents," Miller said.

"PCH has failed to provide information that the Attorney General of Iowa has a right to obtain under Iowa law to investigate possible consumer fraud. The company expects the benefits of free access to Iowa's older citizens, but it refuses to accept its responsibilities -- including the obligation to make a full and fair response to a consumer fraud investigation by the State," he said."We are arguing to the Court that PCH must not be permitted to dictate the scope and timing of the State's investigation of possible unlawful conduct, all the while continuing to solicit checks from many of the very people most in need of protection."

Miller said the "application for order enforcing a civil investigative demand" filed today is not a lawsuit nor an allegation of fraud or misrepresentation. "We are heavily engaged with PCH, but this is part of our investigation phase," he said. The Civil Investigative Demand was issued to PCH in late 1998, and Miller said his office has been in a "tug of war" with PCH on the company's responses since then.

By law, sweepstakes may not require purchases in order to enter.

The application noted that a survey of consumers who spent $2,500 or more for PCH mail order products in 1996 or 1997 or in each year disclosed that 83% were age 65 or older, and almost one-third were age 80 or older. Some PCH customers receive as many as 144 mailings from the company in a single year, the application noted. "These often-vulnerable consumers receive many targeted mailings that are not sent to most households," the application said.

The application gave an example that one 82-year-old Iowan had sent PCH more than $9,700 in 1997 alone, and that an Iowa couple in their late eighties sent PCH $24,000 in a period of 20 months. The application said the couple wintered in Arizona, but became so afraid of missing an imminent visit by the prize patrol at their Arizona trailer that for three years they did not return to their home in Iowa.

The Attorney General's Office also issued a subpoena in early 1998 directing PCH to disclose information about the dollar losses of individual high-spending Iowans, predominantly older Iowans. The Office ultimately filed an application to enforce the subpoena, resulting in partial enforcement of the subpoena and entry of a protective order regarding the confidentiality of PCH materials. The Attorney General's Office appeal of that ruling and protective order is currently pending in the Iowa Supreme Court.

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