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Publishers Clearing House Settles With States

Aired June 26, 2001 - 16:18   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NATALIE ALLEN, CNN ANCHOR: Well, as we reported at the top of the hour, Publishers Clearing House Sweepstakes has cut a $34 million deal with the attorneys general from 26 states. Under the settlement, the company that once promised "You're a winner" must now change the language of its sweepstakes promotional material.

And joining us now with a closer look at the deal is Jennifer Granholm, the attorney general from Michigan.

Jennifer, thanks for being with us.

JENNIFER GRANHOLM, MICHIGAN ATTORNEY GENERAL: Thank you, Natalie.

ALLEN: Was it hard to take on Publishers Clearing House?

GRANHOLM: Publishers Clearing House was clearly the biggest of the big with respect to sweepstakes promoters, but I tell you the attorneys general across the country who participated in this -- in particular, the attorney general of Missouri, Jay Nixon -- did a phenomenal job of negotiating a hard negotiation. But this will revolutionize, I think, the way that sweepstakes promoters do business.

ALLEN: Let's get a question from our live chat right now.

"Do people really win that without buying their outrageous magazine subscriptions?" That's from Michael Smith, and of course, that's the big question, I guess, that's surrounding this lawsuit.

GRANHOLM: You know, the question -- the question underscores the problem. Everybody who gets one of these believes that they have to buy something in order to win. It's just not true. You do not have to buy in order to win.

These companies have gone out of their way to make people believe that they have to buy something, that they've got a special relationship with the company, especially if they've purchased a lot, when in reality what it is, is these companies have targeted in laser- like on vulnerable consumers who often have spent thousands of dollars buying stuff that they just didn't need, like books or videotapes, locked in boxes in their garage, never opened, but because they really thought that that would give them a better shot. Not true.

ALLEN: We have another live chat question for you, Jennifer. "Where does the 34 million go?"

GRANHOLM: Nineteen million of it will be in the form of restitution to consumers. That money will go to reimburse people who have spent over a certain threshold of dollars. Now that has not been determined yet by the attorneys general, and we'll be deciding that over the next 30 days. But there is a million dollars that is coming out in a penalty. In fact, the -- Publishers Clearing House itself did admit that they had deceived consumers in the consent judgment. They wrote, they acknowledged that their mailings were confusing, that some consumers were deceived, and it regrets and apologizes for having deceived consumers. And that causes us, of course, to believe that there ought to be a penalty associated with it. So there's a million dollar penalty. There's a million dollars for the program to administer the restitution. And the rest goes for consumer education and for reimbursing the states for the cost of the litigation.

ALLEN: All right, we've got another one for you from our live chat, from Mike Murphy. "Is there any hint that Publishers will go bankrupt before paying a dime of this settlement?"

GRANHOLM: No, we don't believe so. We've had a lot of conversations with Publishers Clearing House. This is a negotiated settlement. We think this is something they can do. And I think that, you know, this is really a situation where the United States consumers are the winners.

ALLEN: So we won't be seeing from Publishers Clearing that "Natalie Allen, you've won a million dollars!" anymore?

GRANHOLM: I have some example, Natalie.

ALLEN: OK.

GRANHOLM: You know, here we go. "This PCH advisory is sent to certified cash prize winner." Now, they can't say that it's a certified cash prize winner unless in fact they are a winner.

They send these little greetings cards to make people believe that they are, you know, very specially identified with the company. It says, "You're a guaranteed winner." Again, not permissible.

They often send very official-looking documents. This looks like a legitimate overnight delivery.

ALLEN: Sure.

GRANHOLM: It's not. It's just a piece of junk mail, really, and it makes it looks like it's an official, important document. They can't do this anymore. They can't say that something has been certified. They can't say that the board of judges has reviewed it, making it look like an official document where there's a third party that verifies and authenticates it. They can't do that anymore.

ALLEN: And the bottom line, Jennifer, though, is that even though Publishers Clearing House can't do this, people still need to be on the lookout for deceptive marketing practices, correct? GRANHOLM: All consumers -- all consumers need to be on the lookout certainly for direct mail deceptive marketing practices, but the reality is, on the sweepstakes side, we think this will have changed the way they do business, and that is a victory for the consumer.

ALLEN: All right, Jennifer Granholm, thanks so much, Michigan attorney general.

GRANHOLM: Thank you.

ALLEN: Thank you.

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