Publishers Clearing House
Encyclopedia
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.
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
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 and collectibles 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.
Between 1994 and 2010, Publishers Clearing House has paid over $52 million to settle allegations that its magazine promotions were misleading. It “agreed to change the ways it promotes its sweepstakes" and apologized for the "harm done in the past by its deceptive practices". The first of these settlements was with 14 states, in August 1994. The most recent was in September of 2010, when it paid $3.5 million to settle contempt charges for violating a previous agreement (See "Government Regulation" section, below).
By 2000 PCH’s magazine and merchandise sales plummeted at least 30 percent “amid bad publicity from lawsuits now numbering 25 in which individuals and attorneys general - including New York's - alleged that it deceived consumers in its frequent mailings.” This resulted in the laying off a quarter of its 800-person work force.
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 use the registration information to increase PCH’s mailing lists. ”
In 2009 Publishers Clearing House partnered with Arkadium to launch PCHGames.com, an ad supported site with both display and video ads. This was followed by the acquisition of online casual gaming sites and other online properties.
As of August 2011 the company maintained and operated eight online properties. On August 17th, 2011 Publishers Clearing House announced the launch of a new sweepstakes program designed to increase engagement with its customers while bolstering its presence on Facebook. The new program enables visitors to PCH Online's Facebook page with a chance to double any money won that's between $10,000 and $1 million from the sweepstakes running through 2012. The odds of winning that sweepstakes, Giveaway #1400, are 1 in 1.75 billion.
Publisher’s Clearing House cited cost of litigation for the reason for a settlement according to PCH Senior Vice President Bill Low, “We believe our mailings have always been clear to our many customers”… “Nevertheless prolonged litigation is very expensive. We needed to resolve this matter, and we have, going the extra mile by agreeing to pay for consumer restitution and education and by adopting high standards that will make our advertising even clearer for the public."
However despite this PCH statement that they had settled because "prolonged litigation is very expensive", in June 2001, as part of a $34 million settlement with 25 states, Publishers Clearing House acknowledged for the first time, the "harm done in the past by its deceptive practices", and apologized for that harm. It also agreed to “immediate restitution to thousands of consumers – and will make significant and permanent reforms in the way it conducts its future contests.” The agreement included the following concessions:
Despite having signed these two Settlement Agreements with 48 states within 11 months, PCH continued to employ questionable tactics (see December 2007, Iowa Attorney General Letter of Understanding and September, 2010 settlement of contempt charges).
In December 2007 PCH agreed to a formal Letter of understanding
with Iowa’s Attorney General that requires PCH to implement a program to identify elderly consumers at the point where their spending is just beginning to be excessive – when an Iowan age 65 or over has spent $500 or more in a calendar quarter for PCH products.
In September 2010, to settle contempt charges that it had violated the 2001 Agreement, Publishers Clearing House entered into a Supplemental Judgment with 33 states to extend the consumer protections set forth in its 2000 and 2001 multi-state settlements. A total amount of $3.5 million was paid to cover the total cost of the States' joint investigation. Specific terms of the 2010 settlement include:
In 2008, “The estimated odds for the $10 million drawing are 505,000,000 to one. That's equivalent to sending over 1.3 million entries every day for a year (and the sweep doesn't even run for a full year).”
In 2007, for the $10 million drawing, Publishers Clearing House said "your odds of winning are 1 in 330 million.”
and Dick Clark, the spokespersons for AFP, mistaken for representatives of PCH. McMahon was never employed by PCH and never appeared in any commercial for the company. Upon his death, many articles and obituaries around the country mistakenly associated McMahon with PCH.
Direct marketing
Direct marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate straight to the customer, with advertising techniques such as mobile messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional...
that offers discounted magazine
Magazine
Magazines, periodicals, glossies or serials are publications, generally published on a regular schedule, containing a variety of articles. They are generally financed by advertising, by a purchase price, by pre-paid magazine subscriptions, or all three...
subscriptions and household merchandise to consumers with the chance to enter to win one of many ongoing sweepstakes
Sweepstakes
The United States consumer sales promotion known as a sweepstake has become associated with marketing promotions targeted toward both generating enthusiasm and providing incentive reactions among customers by enticing consumers to submit free entries into drawings of chance...
. As a direct marketing firm, it has no retail
Retail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
offices; its operations are concentrated in several physical offices, including its world headquarters in Port Washington
Port Washington, New York
Port Washington is a hamlet and census-designated place in Nassau County, New York on the North Shore of Long Island. As of the United States 2010 Census, the community population was 15,846....
, New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
. It reaches consumers through direct mail offers and online communications supported by its web site.
Publishers Clearing House is a limited liability company
Limited liability company
A limited liability company is a flexible form of enterprise that blends elements of partnership and corporate structures. It is a legal form of company that provides limited liability to its owners in the vast majority of United States jurisdictions...
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.
History
Publishers Clearing House was founded in 1953 by Harold and LuEsther MertzLuEsther Mertz
LuEsther T. Mertz , a businesswoman and philanthropist, was the youngest child of a Methodist minister and his wife. She trained as a librarian at Syracuse University....
and their daughter, Joyce Mertz-Gilmore. Mertz had worked for Look
Look (American magazine)
Look was a bi-weekly, general-interest magazine published in Des Moines, Iowa from 1937 to 1971, with more of an emphasis on photographs than articles...
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
Following on the success of the famous Reader's Digest
Reader's Digest
Reader's Digest is a general interest family magazine, published ten times annually. Formerly based in Chappaqua, New York, its headquarters is now in New York City. It was founded in 1922, by DeWitt Wallace and Lila Bell Wallace...
sweepstakes introduced in 1963, Publishers Clearing House launched its own sweepstakes
Sweepstakes
The United States consumer sales promotion known as a sweepstake has become associated with marketing promotions targeted toward both generating enthusiasm and providing incentive reactions among customers by enticing consumers to submit free entries into drawings of chance...
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 and collectibles 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.
Between 1994 and 2010, Publishers Clearing House has paid over $52 million to settle allegations that its magazine promotions were misleading. It “agreed to change the ways it promotes its sweepstakes" and apologized for the "harm done in the past by its deceptive practices". The first of these settlements was with 14 states, in August 1994. The most recent was in September of 2010, when it paid $3.5 million to settle contempt charges for violating a previous agreement (See "Government Regulation" section, below).
By 2000 PCH’s magazine and merchandise sales plummeted at least 30 percent “amid bad publicity from lawsuits now numbering 25 in which individuals and attorneys general - including New York's - alleged that it deceived consumers in its frequent mailings.” This resulted in the laying off a quarter of its 800-person work force.
Online Development
The company launched its first website, PCH.com in 1999, providing an online means to enter the Publishers Clearing House sweepstakes and shop for magazine and product offerings. In July 2006, “Publishers Clearing House acquired Blingo Inc., a company sponsored website that offers search results to marketers. Blingo was later re-branded as Search and Win.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 use the registration information to increase PCH’s mailing lists. ”
In 2009 Publishers Clearing House partnered with Arkadium to launch PCHGames.com, an ad supported site with both display and video ads. This was followed by the acquisition of online casual gaming sites and other online properties.
As of August 2011 the company maintained and operated eight online properties. On August 17th, 2011 Publishers Clearing House announced the launch of a new sweepstakes program designed to increase engagement with its customers while bolstering its presence on Facebook. The new program enables visitors to PCH Online's Facebook page with a chance to double any money won that's between $10,000 and $1 million from the sweepstakes running through 2012. The odds of winning that sweepstakes, Giveaway #1400, are 1 in 1.75 billion.
Government Regulation
In August 2000, Publishers Clearing House, without admitting any wrongdoing, agreed to an $18 million settlement with 23 states. A key part of the settlement included refunds for any consumer who spent at least $2,500 in purchases in any year between 1997-1999. The agreement required inclusion of a "Sweepstakes Facts Box" that will clearly disclose important information such as odds of winning, together with all major prizes, values, quantities and end date for the sweepstakes and important disclaimers which tell consumers that "Buying Won't Help You Win," and "You Have Not Yet Won." The agreement also stipulated that PCH must maintain a "Do Not Contact" list for consumers who do not want to receive future sweepstakes offers, and that the company would be prohibited from:- misrepresenting the chances of winning a prize
- requesting certain information or action from recipients which would lead them to believe they have won. This includes their whereabouts at the time the prize is awarded or their preference for events related to the awarding of the prize
- using a personalized simulated check to mislead a recipient into believing he/she has won or is likely to win
- representing that a recipient has an enhanced chance of winning a prize, is in a select group, has "never been closer" to winning or enjoys a special status in the sweepstakes and
- misrepresenting a sweepstakes mailing as being delivered by special delivery or that any communications are from a federal or state government or other official entity
Publisher’s Clearing House cited cost of litigation for the reason for a settlement according to PCH Senior Vice President Bill Low, “We believe our mailings have always been clear to our many customers”… “Nevertheless prolonged litigation is very expensive. We needed to resolve this matter, and we have, going the extra mile by agreeing to pay for consumer restitution and education and by adopting high standards that will make our advertising even clearer for the public."
However despite this PCH statement that they had settled because "prolonged litigation is very expensive", in June 2001, as part of a $34 million settlement with 25 states, Publishers Clearing House acknowledged for the first time, the "harm done in the past by its deceptive practices", and apologized for that harm. It also agreed to “immediate restitution to thousands of consumers – and will make significant and permanent reforms in the way it conducts its future contests.” The agreement included the following concessions:
- A provision that prohibits PCH from making any false statement, no matter how small or seemingly insignificant. In addition, the settlement puts in place strict prohibitions against misleading or deceptive statements or omissions and, for the first time, prohibits PCH from implying, by any means whatsoever, anything that it is prohibited from stating directly.
- Prohibiting PCH from discriminating between consumers who order magazine subscriptions and those who do not. From now on, PCH may only use a single entry form for the sweepstakes, to be used by all consumers whether they order products from PCH or not. In the past, customers who did not buy magazines or other products were forced to search for a small, plain entry card among the various colorful mail pieces PCH included with the contest solicitation. This practice, now ended, led consumers inevitably to conclude that those who ordered had a better chance to win than those who did not.
- Increased safeguards to protect that small minority of vulnerable PCH customers who may continue to be confused about whether buying products has any impact on their chances of winning.
Despite having signed these two Settlement Agreements with 48 states within 11 months, PCH continued to employ questionable tactics (see December 2007, Iowa Attorney General Letter of Understanding and September, 2010 settlement of contempt charges).
In December 2007 PCH agreed to a formal Letter of understanding
Letter of understanding
A Letter of Understanding or LOU is a formal text that sums up the terms and understanding of a contract which mostly has been negotiated up to this point only in spoken form...
with Iowa’s Attorney General that requires PCH to implement a program to identify elderly consumers at the point where their spending is just beginning to be excessive – when an Iowan age 65 or over has spent $500 or more in a calendar quarter for PCH products.
In September 2010, to settle contempt charges that it had violated the 2001 Agreement, Publishers Clearing House entered into a Supplemental Judgment with 33 states to extend the consumer protections set forth in its 2000 and 2001 multi-state settlements. A total amount of $3.5 million was paid to cover the total cost of the States' joint investigation. Specific terms of the 2010 settlement include:
- Increased outreach to customers with frequent purchases (High Activity Customers) to ensure that they understand that “no purchase necessary" means that no purchase is necessary to enter or win, a key principle of a legitimate sweepstakes
- Cease using the tactic of sending a communication from the “Board of Judges” to indicate that the recipient is close to winning
- More educational reminders that no purchase is necessary to enter or win
- An independent Ombudsman will be put in place to facilitate ongoing monitoring and dialogue between PCH and the States
- Increased prominence of the No Purchase Necessary To Win message on entry order forms for the most active customers
- Enhanced description of different giveaways offered in the same promotional mailing
- Additional messaging that sweepstakes winners are selected randomly.
Odds of winning
As posted on the PCH website on September 7, 2011, the odds of winning Giveaway #1400 were 1 in 1.75 billion. This is an increase of more than 23% from the August 2010 odds for Giveaway #1830, of 1 in 1.21 billion.In 2008, “The estimated odds for the $10 million drawing are 505,000,000 to one. That's equivalent to sending over 1.3 million entries every day for a year (and the sweep doesn't even run for a full year).”
In 2007, for the $10 million drawing, Publishers Clearing House said "your odds of winning are 1 in 330 million.”
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.Competitors
Publishers Clearing House was a competitor of American Family Publishers (AFP), which ran similar sweepstakes. The two companies were often mistaken for each other, with Ed McMahonEd McMahon
Edward Peter "Ed" McMahon, Jr. was an American comedian, game show host and announcer. He is most famous for his work on television as Johnny Carson's sidekick and announcer on The Tonight Show from 1962 to 1992. He also hosted the original version of the talent show Star Search from 1983 to 1995...
and Dick Clark, the spokespersons for AFP, mistaken for representatives of PCH. McMahon was never employed by PCH and never appeared in any commercial for the company. Upon his death, many articles and obituaries around the country mistakenly associated McMahon with PCH.