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Reader's Digest Settles Sweepstakes Suit

March 29, 2005

Reader's Digest • Consumer Complaints --- News • Reader's Digest Settles Connecticut Sweepstakes Suit • Reader's Digest Pays $6 Million to Settle Sweepstakes Complaints

The Reader's Digest Association has agreed to a $196,000 settlement with the state of Connecticut for deceptive marketing of its sweepstakes contests.

Under the settlement, Reader's Digest will pay up to $171,000 in restitution to Connecticut consumers and another $25,000 to the state to cover costs associated with the case.

Attorney General Richard Blumenthal sued Reader's Digest on behalf of the state Department of Consumer Protection (DCP) for deceiving consumers into participating in its contests by claiming that purchasing more company products increased their chances of winning. In reality, additional purchases had no effect on the likelihood of winning.

Under the settlement, Reader's Digest must disclose the odds of winning its contests and entry deadlines. The company must also inform consumers that purchases do not increase the chances of winning and make it clear in sweepstakes solicitations that consumers have not yet won a prize.

"Money will go back to the victims of this Reader's Digest ploy - designed to deceive consumers into buying subscriptions through slick sweepstakes pitches," Blumenthal said.

"This reprehensible ruse - buy the magazine subscription to better your chances of winning - convinced consumers to spend thousands without improving their sweepstakes odds one iota. This lure is intolerable and indefensible.

"My office has pursued publications for employing these tactics before, fighting successfully for refunds against American Family Publishing, Publisher's Clearing House and Time Magazine, and we'll do it again in our continuing campaign," Blumenthal said.

The settlement includes $121,229 for so-called "high activity" customers, who spent more than $2,500 a year on Reader's Digest products between July 1, 1997 and June 30, 2000. About 117 of those consumers will receive letters from an independent claims administrator this week telling them how to file for compensation.

Reader's Digest agreed to set aside another $50,000 for customers who purchased less than $2,500 a year of Reader's Digest materials during the same time period.

In 2001, Reader's Digest settled similar claims with 33 states, but Connecticut continued to pursue the company because the multi-state settlement didn't go far enough. The settlement ultimately secured more money for victims and taxpayers, as well as an injunction barring Reader's Digest from using such marketing practices in the future.

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