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Publishers Clearing House
Type Private
Founded 1953, Port Washington, New York
Headquarters Flag of the United States.svg Port Washington, New York
Key people Robin B. Smith, Chairman
Andrew Goldberg, President and CEO
Deborah Holland, Executive Vice President
H.W. Low, Senior Vice President
Todd Sloane, Senior Vice President/Creative
John Princiotta, Senior Vice President/Marketing
Craig Anderson, Senior Vice President/Operations
Rick Busch, Senior Vice President/CFO
Christopher L. Irving, Assistant Vice President, Consumer & Legal Affairs
Industry Publishing
Revenue US $530 Million (2006)
Net income US $? Million (2006)
Employees 420 (2006)
Website www.pch.com

Publishers Clearing House (PCH) is a multi-channel direct marketing company that offers discounted magazine subscriptions and household merchandise to consumers with the chance to enter to win one of many ongoing sweepstakes. As a direct marketing firm, it has no retail offices; its operations are concentrated in several physical offices, including its world headquarters in Port Washington, New York. It reaches consumers through direct mail offers and online communications supported by its web site.

Publishers Clearing House is a limited liability company staffed by 400 employees and is headquartered in Port Washington, Long Island, NY, the same town where the company founder, Harold Mertz, started the company from his garage. The street adjoining the local post office in Port Washington, LuEsther Mertz Plaza, is named after Mr. Mertz's wife. Upon passing of Mertz and his immediate family, the company was passed to ownership by a number of charitable trusts.

Contents

History

Publishers Clearing House was founded in 1953 by Harold and LuEsther Mertz and their daughter, Joyce Mertz-Gilmore. Mertz had worked for Look magazine and believed that magazine subscriptions could be sold in a more efficient manner by bundling them together in a single mass mailing offering the lowest introductory prices. With mailings offering consumers an array of discounted subscription offers, the company soon became the largest magazine circulation agency in the industry.

Following on the success of the famous Reader's Digest sweepstakes introduced in 1963, Publishers Clearing House launched its own sweepstakes in 1967 as a way to draw attention to the magazine deals in company mailings. In the late 1980s the company began awarding sweepstakes prizes in live recorded moments featuring the Prize Patrol, a team of PCH employees that travels to locations awarding prizes with balloons, champagne, flowers and a big check with cameras recording the event for commercial use.

While the company’s product offerings were broadened with a wide range of merchandise including household and personal items, home entertainment, collectibles and more in the mid 1980s, magazines sales accounted for the majority of the company's sales until the early 2000s. Merchandise now accounts for the majority of Publishers Clearing House sales. The company launched its website in 1999, providing online means to enter the Publishers Clearing House sweepstakes and shop for magazine and product offerings.

By February 2000, however, amidst bad publicity from lawsuits that would eventually be settled for more than $52 million and an acknowledgement that it had deceived consumers, the company’s magazine and merchandise sales plummeted by more than 30 percent. The plummeting sales, bad publicity, and high legal costs caused the company to lay off a quarter of its 800-person work force. [1]

As reported by the New York Times, late in 2008 PCH expanded its traditional direct mail and online offers to more youthful channels such as Twitter and iPhone application. According to the New York Times article of December 22, the objective of these new offers was to bring young customers into PCH’s world as part of an overall effort to collect information on Web users, show them advertisements and use the registration information for PCH’s mailing lists.

In 2009, the odds for the top prize in Publisher's Clearing House Giveaway #1400 (a prize of ten million dollars) were 1 in 1.75 billion, the worst the odds have ever been for a PCH giveaway.

Prize Patrol

The Prize Patrol is the team from Publishers Clearing House that knocks on the door of a recent entrant of the company's sweepstakes and surprises them with the news that they have won a large cash prize. The Prize Patrol has been parodied on late night television shows such as Saturday Night Live and The Tonight Show and referenced in numerous network sitcoms.

Controversy

In the 1990s, controversy arose against the sweepstakes industry with Publishers Clearing House, American Family Publishers and Reader's Digest all coming under regulatory scrutiny for marketing techniques that caused consumers to believe a purchase would increase their chances of winning. An example of this was the statement "No Purchase necessary to Enter", instead of the required "No Purchase necessary to Win". Settlements were reached between Publishers Clearing House and 48 states requiring that the sweepstakes provide clearer disclosures regarding chances of winning and the fact that a purchase does not increase chances of winning.

In 1994, PCH agreed to pay $490,000 to 14 states to settle allegations that it used deceptive advertising in its annual sweepstakes. The company agreed to stop using the word "finalist" on most solicitations and to employ the phrase "final round" only in the last weeks of the promotions. Some states had reported that all persons receiving sweepstakes entries were identified as finalists. PCH also agreed to explain to consumers that if they were dropped from the mailing list they could write the company to be reincluded in the sweeps and then entitled to all entry mailings produced for the next 12 months.

One of these actions was an investigation sparked by a lawsuit against Publishers Clearing House in Iowa determined that “… more than 1,900 Iowans had purchases of $1000 or more from PCH in 1996 or 1997, or possibly both, according to PCH's own records. [Also] 289 Iowans made purchases of $2500 or more in one or both of those years. [Another survey by the same office] of almost half of those Iowans revealed that 83% were age 65 or older.”[2]

In August 2000, Publishers Clearing House signed an Agreement with 23 State Attorneys General to pay $18 million in restitution to the 23 states, some to be given back to 15,000 consumers who spent more than $2,500 each trying to win the sweepstakes.[3] It also agreed to:

  • include in all mailings a Sweepstakes Facts sheet that includes odds of winning, deadlines, prize values, and quantity of prizes offered.
  • not call a consumer a winner unless the consumer has actually won.
  • when saying someone could be a winner, state in equal-sized type the conditions necessary to win.
  • send "no purchase necessary" notes to consumers spending $1,000 or more a year.
  • survey those spending $2,500 or more to make sure they understand they need not buy to enter.
  • discontinue sweepstakes mailings to any surveyed recipients who continue to believe that their odds of winning are enhanced by purchases.
  • not use a document designed to simulate a check unless the face of the document clearly states it is not a check.

One and a half years later, in June 2001, in connection with a comprehensive settlement brought on by a wave of consumer protection lawsuits by Attorneys General from Texas and 25 other states, PCH agreed to pay $34 million in fines, penalties and restitution, including $19 million to be paid as restitution to consumers who were high activity spenders and deceived by PCH.[4]

Texas Attorney General John Cornyn commenting on this Settlement, stated it contained "An acknowledgment, for the first time, from PCH of the harm done in the past by its deceptive practices, and an apology for that harm".[5]

More recently, in 2003 The Attorney General of Oregon sued Publishers Clearing House, alleging that:

"conducting promotional sweepstakes, Publishers Clearing House makes wilful misrepresentations to Oregon consumers in order to convince them to participate in sweepstakes, purchase products, or order subscriptions".

The matter was resolved by agreement.

However as recently as July 2008, Iowa Attorney General Tom Miller issued a warning to seniors in his state, concerning Publishers Clearing House and their marketing tactics:[6]

"Iowa Attorney General Tom Miller has issued a warning to seniors in his state to be wary of sweepstakes mailings that make it appear they are close to winning a major sweepstakes prize". Iowa AG Warns Residents About Publishers' Clearing House goes on to say that "He singled out Publishers Clearing House, saying the company's mailings suggest the chances of winning may go up if they order more merchandise or magazines".

Competitors

Publishers Clearing House was a competitor to American Family Publishers (AFP) that ran similar sweepstakes. The two companies were often mistaken for each other, with Ed McMahon and Dick Clark, the spokespeople for AFP, mistaken for representatives of the more well known PCH.

References

  1. ^ Robert Walzer (2000-02-18). "PCH cleans house, goes virtual in profit play". Long Island Business News. http://www.allbusiness.com/human-resources/902436-1.html. Retrieved 2008-10-07.  
  2. ^ "Miller Asks Court to Order Publishers Clearing House to Cooperate with Investigation or Stop Operation in Iowa". Iowa Attorney General (news release (2000-01-28). Retrieved on 2008-02-05
  3. ^ "Spitzer announces landmark settlement with Publishers Clearing House". NY Attorney General (news release) (2000-08-22)|http://www.oag.state.ny.us/media_center/2000/aug/aug22a_00.html Retrieved on 2008-02-02.
  4. ^ "Wisconsin’s case against Publishers Clearing House". Wisconsin Dept. of Justice (2001-06-26). Retrieved on 2008-02-02
  5. ^ "Texas, 25 States reach settlement with sweepstakes giant". Texas Attorney General (2001-06-26). http://www.oag.state.tx.us/newspubs/newsarchive/2001/20010626pch2.htm Retrieved on 2008-02-02
  6. ^ Publisher's Clearing House - a Clear Scam July 21, 2008 by Sara Ross publishers_clearing_house_a_clear_scam.html Retrieved on 2009-01-06

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