FTC Takes Action Against Publishers Clearing House for Misleading Consumers

Publishers Clearing House has been a household name for decades. It’s been awarding prizes through its sweepstakes and games since 1967, with its Prize Patrol showing up on doorsteps with giant checks.

Now, Publishers Clearing House will be writing an even bigger check: $18.5 million to the Federal Trade Commission to refund consumers for deceptive marketing practices. The payout is required by a proposed court order stemming from an FTC lawsuit against the company for using “dark patterns” to mislead consumers. Publishers Clearing House also will be required to make changes to how it conducts business online.

The FTC release about the action it's taking against Publishers Clearing House doesn’t specify how many consumers were impacted or how they will receive refunds. However, here’s what to know about the complaint against the direct marketing company.

How the FTC claims Publishers Clearing House misled consumers

The FTC complaint against Publishers Clearing House stems from its online practices and emails sent to consumers who enter sweepstakes online or make purchases through PCH.com. The government agency claims that the company used dark patterns—website design techniques and manipulative phrasing—to make consumers believe that they had to buy products to enter sweepstakes or increase their chances of winning.

According to the complaint, consumers were prompted on the PCH.com homepage to complete sweepstakes entry forms by clicking on buttons with phrases such as “Win It!” or “Win for Life!” After clicking the buttons, consumers had to navigate through pages of advertisements and sales pitches before they could enter the sweepstakes. And the ads suggested that consumers needed to first make a purchase to enter or that making a purchase increased their chances of winning—neither of which were true.

After completing entry forms, consumers allegedly received emails that made them believe they had to take a final step to complete their entries by clicking on a link that took them to pages with sales pitches.

According to the FTC complaint, PCH used other unlawful tactics, including the following:

• Failing to disclose shipping and handling costs to consumers who made purchases on PCH.com;
• Promising that purchases were risk free without informing consumers they would have to pay for return shipping for unwanted products;
• Using misleading email subjects that led consumers to believe the emails were related to tax forms or official documents; and
• Including a misleading statement in its privacy policy that stated it didn’t sell consumer data to third parties, even though it did.

Changes PCH must make

As part of its settlement with the FTC for violating the FTC Act and CAN-SPAM act, PCH agreed to make several changes to its email and internet operations—in addition to paying $18.5 million to the FTC to refund consumers.

Going forward, PCH is prohibited from implying that purchases are required to enter sweepstakes or that making a purchase will increase consumers’ chances of winning sweepstakes. It also will have to make clear disclosures on all shopping pages that purchases aren’t required to enter sweepstakes.

PCH will have to disclose any additional fees related to purchases, as well as cancellation and refund policies. It will have to stop sending emails with deceptive subject lines, destroy consumer data collected before January 1, 2019, and stop misrepresenting how it shares consumer data.

In a statement posted on PCH.com, PCH Vice President for Consumer and Legal Affairs Christopher Irving said that the company admits to no wrongdoing and that despite the FTC’s allegations, it’s well known that no purchase is necessary to enter its sweepstakes. “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!”