Sweepstakes company agrees to $18.5 million 'dark patterns' settlement

Photo (c) Daniel Grizelj - Getty Images

The FTC charges Publishers Clearing House deceived consumers, who will be compensated

Many people aren’t aware that lottery laws in the United States prevent a company or an organization from charging someone money to enter a sweepstakes contest. Or telling a consumer that buying something increases their shot at winning.

We expect scammers to try and pull this nonsense, but sometimes regulators cite a legitimate, 70-year-old company for crossing the line, a company such as Publishers Clearing House (PCH).

After having to settle charges that it deceived consumers once already, the other shoe has dropped for the magazine subscription sweepstakes company. The Federal Trade Commission (FTC) says that PCH crafted "dark patterns" verbiage and graphics in both emails and on its website that led consumers to assume they had to buy something to enter one of its sweepstakes.

The company has agreed to settle the charges by paying $18.5 million, much of which will be distributed to consumers.

The FTC charged PCH sent emails with deceptive subject lines like “High Priority Doc. W-34 Issued” or “W-19 Notice – Step 3 of 3 INCOMPLETE,” leading consumers to believe the email was related to a tax form or official requirement.

Unfortunately, the documents referred to in those subject lines were completely fictitious and there was nothing in the emails that actually referred to these forms. But the FTC says PCH got what it wanted, claiming that numerous consumers clicked on these emails and purchased products or lost valuable time clicking through website pages.

The FTC didn’t stop there. The agency charged PCH hid shipping and handling fees that added an average of 40% to customers' orders. Furthermore, the agency said PCH's claims that orders were risk-free were not accurate and required customers to pay the shipping costs to return merchandise.

Now, PCH has to write consumers a big check!

Funds from the $18.5 million will be distributed to wronged consumers through the FTC. In addition, PCH would be required to:

  • Clearly disclose the full price of any item it lists for sale, along with any additional fees for shipping and handling before a consumer commits to purchasing the item.
  • Stop sending emails with deceptive subject lines and other conduct that violates the CAN-SPAM Act.
  • Destroy consumer data: PCH would be required to delete all consumer data that was collected prior to January 1, 2019. 

How to protect yourself

The FTC reminds consumers that if they’re considering participating in a sweepstakes contest, the first thing they need to realize is that if a sweepstakes is truly up to snuff, it has to be free. In other words, if someone says you have to pay or buy something to play, what they’re asking you to do is illegal.

On the other hand, if it’s a scammer trying to trick you into believing you won a prize, their bag of tricks includes asking for a person’s financial information or paying fees, taxes, or customs duties in order to get a prize. 

The Post Office is on the consumer's side, too

The FTC can ride herd on questionable consumer sales tactics only to a point. USPS, however, sees PCH’s kind of activity on a daily basis. According to the Deceptive Mail Prevention and Enforcement Act, sweepstakes marketers are also forbidden from sending them mail that…

  • Claims the recipient is a winner, unless that person has actually won a prize.
  • Sends them mail that includes a fake check unless it includes a statement on it that it is nonnegotiable and has no cash value. 
  • Uses a seal, name, or term that implies a federal government connection, approval, or endorsement. 

Don’t like getting these sweepstakes mailings? Well, you have the right to stop them.

USPS says that sweepstakes promoters must give consumers a reasonable way to request removal from mailing lists. The only hassle is that the request has to come in writing, however, PCH does offer an online method.

Once someone sends such a request in, marketers have to stop sending them mail for five years. If a company doesn’t do what it’s asked, then consumers have the right to sue in small claims court for failure to remove their names from sweepstakes mailing lists. 

Take a Financial Relief Quiz. Get matched with an Authorized Partner.