May 28, 1999
Media Contact: Jenn Meale
Phone: (850) 245-0150
American Family Publishers to Revise Sweepstakes, Pay $4 Million
TALLAHASSEE -- American Family Publishers will dramatically revise its sweepstakes practices and pay $4 million to resolve charges that the company deceived consumers, Attorney General Bob Butterworth announced today.
Under an agreement with Florida and three other states, the company will also make charitable donations in the names of its celebrity spokesmen, Dick Clark and Ed McMahon.
"Unlike millions of sweepstakes entries sent out by American Family Publishers, this agreement is definitely a winner," Butterworth said. "It is intended to eliminate consumer deception in the future while holding the company responsible for past abuses."
Butterworth filed a civil complaint in February 1998 charging American Family Publishers and spokesmen Clark and McMahon with using various deceptions to sell magazine subscriptions. Those deceptions included falsely suggesting that recipients must make purchases to win, that recipients were part of a select group vying for a prize and that recipients had to respond immediately to prevent someone else from claiming their prize. Butterworth also accused the company of using deceptive billing practices to entice customers into paying two or more times for the same subscription.
Following Florida's complaint against American Family Publishers, similar complaints were filed by Indiana, South Carolina and West Virginia. Under the agreement, American Family Publishers will pay $1 million to cover the cost of the states' investigation and $3 million in consumer reimbursements. The exact amount consumers in each state will receive has yet to be determined under a formula based on the number of American Family Publishers customers in the participating states. The agreement also calls for the company to make two $10,000 donations to the Muscular Dystrophy Foundation in the names of Clark and McMahon.
Without admitting wrongdoing, American Family Publishers agreed to revise the manner in which it conducts its sweepstakes solicitations. Among numerous requirements under the agreement, the company must:
Post official rules in print no smaller than eight point type and include the odds against winning in those rules.
Refrain from telling recipients they are winners or members of a winnowed-down group of finalists or semi-finalists unless that is actually the case.
Refrain from claiming that a recipient may be holding the winning entry unless the "potential winner" statement clearly indicates that the recipient has not yet won.
Clearly and conspicuously disclose that no purchase is necessary to win a prize and refrain from representations that the chances of winning are enhanced by a recipient's purchase history.
Send special notices to customers who buy large numbers of magazines during a single year reminding them that no purchase is necessary to enter the sweepstakes.
Disclose on subscription invoices the name and number of issues of every magazine purchased and refrain from mailing a second invoice immediately after the initial invoice is sent.
Upon receipt of a duplicate payment of the entire subscription amount for the same invoice, promptly provide a refund or advise the customer a duplicate payment has been made and a refund is available.
The agreement was handled for Florida by Assistant Deputy Attorney General Les Garringer, Special Counsel Gary Betz, Assistant Attorney General Victoria Butler and Financial Investigator Jim Lyons.