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Publishers Clearing House

From Wikipedia - Reading time: 15 min

Not to be confused with Packet Clearing House.
Publishers Clearing House
Company typePrivate
Founded1953; 71 years ago (1953)[1]
HeadquartersJericho, New York, U.S.
Key people
Andrew Goldberg (chairman)
Andrew Goldberg (president and CEO)
Revenue$840.6 million (2013)[2]
Number of employees
550 (2014)[2]
Websitepch.com

Publishers Clearing House (PCH) is an American company founded in 1953 by Harold Mertz. It was originally founded as an alternative to door-to-door magazine subscription sales by offering bulk mail direct marketing of merchandise and periodicals. They are most widely known for their sweepstakes and prize-based games which were introduced in 1967. From August 2020 to March 2024, they owned the Wide Open Media publications Wide Open Spaces (about outdoors lifestyle), Wide Open Country (about country music), and FanBuzz (about sports).[3]

Their sweepstakes has been subject of legal actions regarding whether consumers were misled about the odds of winning, and whether purchases increased their chances. By 2010, the company had reached settlements with all 50 states, and in 2023 the Federal Trade Commission ordered PCH to overhaul its sweepstakes processes.[4]

History

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Early history

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Publishers Clearing House was founded in 1953 in Port Washington, New York by Harold Mertz,[5][6] a former manager of a door-to-door sales team for magazine subscriptions.[7] The company started in Mertz's basement with help from his first wife LuEsther and daughter Joyce.[8][9] Its first mailings were of 10,000 envelopes from Mertz's home on Long Island, New York, and offered 20 magazine subscriptions. A hundred orders were received. Within a few years the company moved out of Mertz's basement into an office building and started hiring staff. When PCH moved its headquarters in 1969, its prior location was donated to the city and renamed the Harold E. Mertz Community Center.[9] The company revenue had grown to US$50 million by 1981, and $100 million by 1988.[7]

In 1967 PCH ran its first sweepstakes as a way to increase subscription sales,[10] based on the sweepstakes held by Reader's Digest.[5] The first prizes ranged from $1 to $10 and entrants had a 1 in 10 chance of winning. After the sweepstakes increased response rates to mailings, prizes of $5,000[7] and eventually $250,000 were offered.[11] PCH began advertising the sweepstakes on TV in 1974.[8][12] It was the only major multi-magazine subscription business until 1977. Former client Time Inc. and several other publishers formed American Family Publishers (AFP) to compete with PCH after the company refused repeated requests by Time for a larger share of sales revenue from magazine subscriptions.[5][9]

AFP and PCH competed for exclusive rights to magazines and for the better promotion and prize ideas. When AFP increased their jackpot to $1 million,[11] and then to $10 million in 1985, PCH raised its prizes to match.[5] $7 million in prizes were distributed by 1979,[13] $40 million by 1991,[6] and $137 million by 2000.[10] In 1989, two members of its advertising team, Dave Sayer and Todd Sloane, started the Prize Patrol, a publicized event where winners are surprised with a check at their home. The idea was inspired by the 1950s television series The Millionaire.[5][14][15] The two companies were often mistaken for each other, with Star Search host Ed McMahon and The $25,000 Pyramid host Dick Clark, the spokespeople for AFP, mistaken for representatives of the better-known PCH.[16]

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Beginning in the 1990s PCH and its primary competitor, AFP, have experienced a series of lawsuits due in part to concerns that their mailings misled consumers about their odds of winning and implied that magazine purchases increased their chances.[5][11] This led to the Deceptive Mail Prevention and Enforcement Act of 2000, which regulates direct mail businesses.[5] At the Senate hearings regarding this Act, PCH claimed most consumers were not confused about their chances of winning or that purchases did not increase their chances. The company said that fewer than five percent of participants spend more than $300.[9] However, government officials from California claimed 5,000 local consumers paid more than $2,500 each in magazine purchases under the false belief that they were increasing their odds of winning the sweepstakes.[17]

Industry sources estimated PCH's response rates decreased by 7 to 12 percent and its sales volume by 22 to 30 percent in response to the bad publicity from these lawsuits.[7][18] In 2000, PCH laid off a quarter of its 800-person work force.[18]

Lawsuits and settlements

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In 1992 thousands of discarded sweepstakes entries from contestants who had not bought magazine subscriptions were found in the company's trash,[5] reinforcing beliefs that the company favored those who made purchases in selecting a sweepstakes winner.[5] PCH said this was done by a disgruntled employee at their mail processing vendor.[9] A class action lawsuit ensued, which PCH settled by giving discarded entrants a second chance to win.[5][19]

In 1994 PCH sent mailings telling recipients they were all "finalists", which led to[11] a lawsuit involving the attorneys general of 14 US states.[20][21][22] Later that year, PCH denied wrongdoing, but agreed to pay a settlement of $490,000 and to change their practices.[21] Under the agreement, PCH said it would define terms like "finalist" and disclose the chances of winning.[23]

In 1997, a contestant of competitor AFP flew to Tampa, Florida thinking he had won, though he had not. The resulting publicity caused more lawsuits for both companies.[7] PCH reached a $30 million national settlement in 1999.[9][24] In 2000, another $18 million settlement was reached with 24 states, after the company sent mass mailings which said "You are a winner!" and used mock personalized checks.[17][25] PCH agreed to avoid similar mailings in the future, and add a "sweepstakes fact box" to mailings.[17][25]

However, concerns about deceptive practices by PCH continued after this national settlement and the passing of the Deceptive Mail Prevention and Enforcement Act in 2000. State attorneys spoke out against the national settlement and additional lawsuits were filed by individual states.[9] Another $34 million settlement was reached in 2001 in a lawsuit involving 25 states, bringing the total settlements since 1999 to $82 million.[1][26] As part of the settlement, PCH was required to avoid terms including "Guaranteed Winner," add disclaimers to mailings saying that the recipient had not yet won and that purchasing merchandise would not increase their chances of being a winner.[27][26][28] PCH reached settlements with all fifty states and agreed to work with a "compliance counsel."[7] PCH apologized in the settlement and said it would contact customers who had spent more than $1,000 on merchandise the prior year.[28]

PCH also reached an agreement with Iowa in 2007.[29] In 2010 the company paid $3.5 million to the attorneys general of 32 states and the District of Columbia to settle possible contempt charges that it had violated the terms of the 2001 agreement. The company denied wrongdoing, but agreed to work with both an ombudsman and a compliance counsel who would review its mailings quarterly.[30][31][32][33]

In April 2014, an investigation by the Senate Special Committee on Aging concluded that PCH had "pushed the limits" of federal law and legal settlements and that additional legislation might be needed, especially since the 2000 law did not cover email and other online communications.[34]

Beginning in late 2021, PCH has been hit with multiple new class action lawsuits, alleging that "Publishers Clearing House sells and rents mailing lists containing subscribers’ personal information to a variety of third parties...with each claiming the publishing company monetizes its subscribers’ private information—including their names and addresses—without consent.[35][36]

In June 2023, the Federal Trade Commission ordered PCH "to overhaul its sweepstakes entry and sales processes, stop surprise fees, and pay $18.5 million to consumers."[4] At that time, the FTC also issued a consumer alert describing the deceptive practices in which PCH was found to engage.[37]

Recent Initiatives

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Online development

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Beginning in the 1990s, the company shifted its focus online.[1][38] It began selling magazine subscriptions and merchandise on PCH.com in 1996.[39] They acquired the assets of search company Blingo in 2006,[40] online gaming company Funtank in 2010, mobile marketing company Liquid Wireless in 2012, and internet news aggregator Topix in 2019.[41]

In 2006, it acquired Blingo Inc., an ad-supported metasearch engine that was later re-branded as PCH Search and Win.[14][42] PCH ran contests on Twitter, Facebook, and Myspace. iPhone apps for slot games and trivia were developed. The company created online play-and-win sites like PCH Games (formerly Candystand) and PCHQuiz4Cash, with air-hockey and video poker games.[1]

In December 2010, PCH acquired Funtank and its online gaming site Candystand.com.[43] In 2011, PCH promoted a "$5,000 every week for life" sweepstakes in TV ads and the front page of AOL.com.[12][27] The following year the company acquired a mobile marketing company, Liquid Wireless.[44] The company utilized, then stopped then started again utilizing coregistration (through other websites) to expand its customer base.[45]

In 2008, a PCH spokesperson said the digital properties were intended to attract younger consumers. By 2013, the internet had become PCH's primary channel of interaction with consumers.[8] The New York Times described the digital transition 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."[1]

Wide Open Media Publishing

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In 2020, PCH acquired digital publisher Wide Open Media Group, publisher of websites Wide Open Spaces, Wide Open Country, and FanBuzz.[3]

These publications focus on particular topics.[46] Wide Open Spaces is about outdoors lifestyle, the Editorial Director of the publication is Rachael Schultz, formerly of Insider and Hearst Communications. Wide Open Country focuses on country music, and is based in Nashville. Finally, their sports publication FanBuzz previously belonged to Cox Media Group.

Products

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PCH began selling merchandise in 1985[8] with two products. After a Hershey's Chocolate Cookbook and a diet cookbook sold more than other products, the company began expanding into jewelry, media, collectibles, household products, and others.[9]

A screenshot of PCHSearch&WIN.com

PCH is a direct-marketing company that sells merchandise and magazine subscriptions and operates several prize-based websites.[12] While best known for the sweepstakes and Prize Patrol it uses to promote its magazine subscriptions,[1][14][39] the majority of the company's revenue is from merchandise.[12] The company has been selling books, media, jewelry, and other consumer items[5] since the 1980s.[9] PCH operates eight websites, including PCH Search and Win, PCH Lotto, PCH Games, PCH Save and Win, and Candystand.[1][12]

The company also sells magazine subscriptions at a discount and advertises subscriptions along with its sweepstakes.[47] It's estimated that companies like PCH keep 75 to 90 percent of the fees from the original subscription, while publishers use the increased distribution to improve circulation numbers and revenue from renewals.[11][48] PCH popularized the idea of using sweepstakes to sell magazine subscriptions in the direct-marketing market and became known by detractors as a producer of junk mail for advertising through mass-mailings.[6][47] Documents filed with the New York State Department in 1993 said that year the company mailed 220 million envelopes. Frequent buyers can receive 30 to 40 mailings a year.[49]

By 2024, direct mail and product sales were discontinued.[50][51]

Sweepstakes

[edit]
The Prize Patrol delivering an oversized check in 2011 to a sweepstakes winner for $1 million plus $5,000 a week for life

Although PCH advertises its sweepstakes along with magazine subscriptions, no purchase is necessary to enter or win.[citation needed] In 1995, PCH began the tradition of announcing winners of its $10 million prize just after the Super Bowl.[52] As of 2012, $225 million in prizes have been distributed.[9] Some of its larger prizes are for $5,000 a week for life,[53] or $10 million.[54] Prizes can also range from $1 Amazon gift cards to $2,500, $1 million or $3 million.[55] The larger cash prizes are paid in installments, typically with a balloon payment at 30 years,[56] reducing the present value of prizes to much less than their nominal values. In August 2024, "early look" prizes were eliminated.[57]

Odds of winning

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According to the official rules, as of June 2020, the odds of winning "$5,000 a Week for Life" in Giveaway 16000 are 1 in 6.2 billion.[58]

Prize Patrol

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The Prize Patrol surprises sweepstakes winners at their homes, work, or other locations with cash prizes capturing the event on video.[8] Since their introduction in 1989, these reality TV-style videos of prize-winners surprised at their doorstep with checks for $1,000 to $10 million have been used in widely broadcast television commercials, and, more recently, in the company's online acquisition efforts, websites and social media communications.[8][12][27][59] In 2013, a $5 million television campaign modified the traditional prize patrol commercial by digitally altering video from classic sitcoms like The Brady Bunch and Gilligan's Island to show the prize patrol visiting characters in the show.[59] Major winners are never contacted in advance; any letters, telephone calls, and social media messages claiming that a person may have already won a major prize, or claiming that they need to pay a fee to collect the prize, are always scams.[60]

The Prize Patrol has made in-person appearances or delivered prizes on TV programs including The Oprah Winfrey Show,[61] The Price Is Right,[62][63] and Let's Make a Deal. Their surprise winning moments have been spoofed by Jay Leno,[64] Conan O'Brien,[65] and the cast of Saturday Night Live;[66] woven into the plots of movies such as Let's Go to Prison,[67][68] The Sentinel,[69] and Knight and Day;[70][71] and Early Edition. They have been the subject of cartoons.[9]

Spokesperson

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In the summer of 2020 Marie Osmond became a spokesperson for Publishers Clearing House with television and online advertisements as well as direct-to-home mailings. In January 2021, Steve Harvey made his debut in television commercials as a spokesperson for PCH.

Charitable giving

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Publishers Clearing House claims that "Through charitable trusts created by [their] founders, more than 40% of the company profits benefit community organizations."[72]

See also

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References

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  1. ^ a b c d e f g Clifford, Stephanie (23 December 2008). "ADVERTISING; Old-Line Magazine Sweepstakes Company Gets Digital". The New York Times. p. 3.
  2. ^ a b "New York Area's Largest Privately Held Companies". Crain's New York Business. 17 November 2014.
  3. ^ a b "Supply Spotlight with Publishers Clearing House's Darin Leach". Criteo. 2 November 2020.
  4. ^ a b "FTC Takes Action Against Publishers Clearing House for Misleading Consumers About Sweepstakes Entries". Federal Trade Commission. 27 June 2023. Retrieved 20 October 2023.
  5. ^ a b c d e f g h i j k Lammie, Rob (21 June 2012). "You may already be a winner! The story of Publishers Clearing House". Mental Floss. Retrieved 13 April 2013.
  6. ^ a b c Saslow, Linda (20 January 1991). "It's Sweepstakes Time, and It's a Frenzy". The New York Times. p. 1.
  7. ^ a b c d e f "International Directory of Company Histories]". St. James Press. 2004. Archived from the original on 10 September 2019.
  8. ^ a b c d e f Haire, Thomas (1 February 2013). "PCH Wins All Day Long". Response Magazine. Archived from the original on 28 March 2017. Retrieved 14 July 2013.
  9. ^ a b c d e f g h i j k Lester, Darrell (27 October 2011). The Naked Truth About Publishers Clearing House (PDF). Pennywyse Press. ISBN 978-1-935437-42-0. Archived from the original (PDF) on 23 January 2018. Retrieved 22 June 2013.
  10. ^ a b "Disappointed couple sues Publishers Clearing House". Associated Press. 15 April 2000. Retrieved 13 April 2013.
  11. ^ a b c d e Jaffe, Greg (18 February 1998). "Sweepstakes Industry May Not Be a WINNER!". The Wall Street Journal.
  12. ^ a b c d e f Mummert, Hallie (November 2011). "Cover Story: Full Sweep". Target Marketing. Archived from the original on 25 August 2019. Retrieved 31 July 2012.
  13. ^ Blumenthal, Ralph (25 July 1979). "Sweepstakes: Some do Hit the Jackpot" (PDF). The New York Times. Retrieved 13 April 2013.
  14. ^ a b c Campanelli, Melissa (26 June 2001). "Publishers Clearing House Acquires Blingo". Direct Marketing News. Archived from the original on 16 June 2018. Retrieved 29 August 2010.
  15. ^ Gelles, Jeff (26 January 1997). "The $10 Million Prize Patrol: Myths and Truths". The Inquirer. Archived from the original on 12 February 2015. Retrieved 30 August 2013.
  16. ^ Faw, Larissa. "The Curious Case Of Ed McMahon And The Publishers Clearing House". Forbes. Retrieved 18 February 2014.
  17. ^ a b c Pae, Peter (23 August 2000). "Publishers Clearing House Loses $18 million". Los Angeles Times. Retrieved 26 April 2013.
  18. ^ a b "PCH Cleans House, Goes Virtual in Profit Play". Long Island Business News. 18 February 2000. Retrieved 14 April 2013.
  19. ^ "Lawsuit sets off million-dollar alert". Associated Press. 26 November 1992.
  20. ^ Evans, David (25 August 1994). "Contest Offers Mislead Entrants Publishers Clearing House Pays $490,000 and Promises To Change Its Promotions". Bloomberg Business News. Archived from the original on 6 November 2012 – via HighBeam Research.
  21. ^ a b "Sweepstakes firm, 14 states make deal". Associated Press. 25 August 1994. Retrieved 13 April 2013.
  22. ^ "That Big Magazine Contest Pays". Associated Press. 25 August 1994. Retrieved 13 April 2013.
  23. ^ "Publishers Clearing House to Spell Out Winning Chances". The Associated Press. 21 August 1994. Retrieved 13 April 2013.
  24. ^ "Publishers Clearing House to Pay $30 Million to Settle Suit". Associated Press. 21 February 2000. Retrieved 26 April 2013.
  25. ^ a b "Publishers Clearing House Strikes Deceptive-Practices Accord". The New York Times. 23 August 2000. p. 16.
  26. ^ a b "Miller Announces $34 million sweepstakes settlement". Associated Press. 15 December 2003. Retrieved 13 April 2013.
  27. ^ a b c Stuart Elliot (11 July 2011). "Prize Patrol Heads Over to AOL". The New York Times.
  28. ^ a b Ulferts, Alisa (27 June 2001). "Publishers Clearing House settles". St. Petersburg Times. Retrieved 10 July 2013.
  29. ^ "Publishers Clearing House". Direct Marketing News. 28 December 2007. Archived from the original on 29 November 2014. Retrieved 10 July 2013.
  30. ^ Pankratz, Howard (10 September 2010). "Publishers Clearing House to pay for violation". The Denver Post. Retrieved 24 October 2013.
  31. ^ Pelham, Victoria (9 September 2010). "Publishers Clearing House to increase protections against deceptive sweepstakes marketing". ABC15.com. Archived from the original on 20 October 2013. Retrieved 2 October 2013.
  32. ^ Blackman, Teresa; Anne Yeager (9 September 2010). "$3.5 Million Publishers Clearing House Lawsuit Settled in Oregon". KGW. Archived from the original on 20 October 2013. Retrieved 30 April 2013.
  33. ^ "States settle Publishers Clearing House "deceptive" trade practices". Consumer Reports. 21 October 2010. Archived from the original on 6 July 2013. Retrieved 13 July 2013.
  34. ^ Giorgianni, Anthony (23 April 2014). "Don't be mislead by Publishers Clearing House". Consumer Reports. Retrieved 4 November 2019.
  35. ^ "Publishers Clearing House Mailing Lists Class Action Lawsuits Overview". topclassactions.com. 3 December 2021. Retrieved 3 December 2021.
  36. ^ Styf, Jon (21 December 2023). "Publishers Clearing House class action alleges company shares purchaser info". topclassactions.com. Retrieved 21 February 2024.
  37. ^ Puig, Alvaro (27 June 2023). "Publishers Clearing House deceived consumers about their sweepstakes contests, FTC says". ftc.gov. FTC. Retrieved 21 February 2024.
  38. ^ Macavinta, Courtney (28 December 1999). "Publishers Clearing House Rushes the Net, Grapples with Privacy". CNET. Retrieved 26 April 2013.
  39. ^ a b Levere, Jane L. (1 December 1997). "Publishers Look to New Medium To Rekindle Sales in Older One". The New York Times. p. 11.
  40. ^ "Publishers Clearing House Acquires Blingo, Inc.; Parent of Famous Prize Patrol Welcomes Blingo's Rapidly Growing Internet 'Search and Win' Site". Business Wire. Archived from the original on 23 January 2018. Retrieved 2 April 2014.
  41. ^ "Publishers Clearing House Acquires Topix". finance.yahoo.com. Retrieved 22 October 2021.
  42. ^ Crowell, Grant, "How Search Engines Make Money", Search Engine Watch
  43. ^ Mickey, Bill (11 January 2012). "Publishers Clearing House Buys Mobile Lead-Gen Provider Liquid Wireless". Foliomag.com. Retrieved 14 June 2013.
  44. ^ Wauters, Robin (6 December 2010). "Publishers Clearing House Buys Funtank, Gaming Site Candystand.com". TechCrunch.com.
  45. ^ Barkin, Eric (July 2013). "Publishers Clearing House Clears Coregistration Concerns". Customer Relationship Management. p. 52.
  46. ^ House, Publishers Clearing (9 May 2023). "Wide Open Media Group Relaunches Wide Open Spaces". Yahoo Finance. Retrieved 21 October 2023.
  47. ^ a b Rothenberg, Randall (31 January 1989). "THE MEDIA BUSINESS: ADVERTISING; Read This and Win $10 Million!!". The New York Times. p. 1.
  48. ^ Hunds, Michael (17 January 1988). "Mail that glitters is not necessarily gold". New York Times Service. Retrieved 13 April 2013.
  49. ^ Span, Paula, "Sweep Dreams, America!," Washington Post, January 28, 1993, pp. C1, C8.
  50. ^ "St. Cloud warehouse lays off hundreds of workers as Publishers Clearing House downsizes". Star Tribune. 24 April 2024.
  51. ^ "What happened to the Mailings and Merchandise Offers?". pch.custhelp.com.
  52. ^ Meier, Barry (27 January 1996). "You're All Finalist!". The New York Times. p. 33.
  53. ^ Grauschopf, Sandra (5 July 2013). "Wish you had won the last PCH SuperPrize? Here's another chance". About.com. Archived from the original on 8 July 2013. Retrieved 22 July 2013.
  54. ^ Grauschopf, Sandra, Publishers Clearing House - $10 Million Giveaway Number 1170 EXPIRED, About.com, archived from the original on 24 May 2013, retrieved 8 June 2013
  55. ^ "Odds of Winning", Media FAQ, Publishers Clearing House, archived from the original on 22 November 2016, retrieved 8 June 2013
  56. ^ "Rules". Publishers Clearing House. Retrieved 13 July 2017.
  57. ^ "An update from Howie on today's $100,000 prize". 31 August 2024 – via facebook.com.
  58. ^ Sweepstakes Facts, archived from the original on 28 April 2020
  59. ^ a b Elliott, Stuart (6 May 2013). "Publishers Clearing House Imagines Handing a Big Check to Gilligan and Mike Brady". The New York Times. Retrieved 19 July 2013.
  60. ^ Debbie (5 April 2017). "Does PCH Contact Major Prize Winners in Advance?". PCH Blog. Retrieved 24 September 2022.
  61. ^ "Million-Dollar Moments". The Oprah Winfrey Show. 28 October 2009. Retrieved 31 July 2012.
  62. ^ Upping The Ante On Plinko! The Price Is Right (Video Clip). youtube.com: Price Is Right. 9 April 2012. Archived from the original on 21 December 2021.
  63. ^ Maloni, J (9 April 2012). "Full week of Plinko, chance to win 100K when PCH Prize Patrol visits The Price is Right". Niagara Frontier Publications. Retrieved 31 July 2012.
  64. ^ PCH On TV Jay Leno Spoofs the PCH Prize Patrol (Video Clip). youtube.com: PCHarchive. 24 January 2011.[dead YouTube link]
  65. ^ Conan O'Brien Promo with Jane (Video Clip). youtube.com. 29 January 2011. Archived from the original on 21 December 2021.
  66. ^ Saturday Night Live Publishers Clearing House Giveaway (Video Clip). hulu.com.
  67. ^ Marder, Brian (24 November 2006). "Let's go to Prison! Review". Hollywood.com. Retrieved 22 July 2013.
  68. ^ Let's Go To Prison Trailer (Video Clip). youtube.com. 23 October 2006. Archived from the original on 21 December 2021.
  69. ^ "The Sentinel". Retrieved 31 July 2012.
  70. ^ Smith, Joseph (1 July 2010). "Movie Review Knight and Day". SunGazette.com. Retrieved 31 July 2012.
  71. ^ Ivers, Patrick. "Laramie Movie Scope Knight and Day". Archived from the original on 26 April 2014. Retrieved 31 July 2012.
  72. ^ "Charitable Trusts and Giving Back to the Community". info.pch.com. Publishers Clearing House. Retrieved 20 February 2024.

Further reading

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