OLYMPIA - Attorney General Christine Gregoire today announced a multi-state settlement that requires one of the country's largest sweepstakes companies to pay restitution to Washington consumers and dramatically change its sweepstakes marketing practices nationwide.
United States Sales Corp. of Northridge, Calif., which does business as United States Purchasing Exchange (USPE), reached the agreement with Gregoire and the attorneys general of 47 other states and the District of Columbia.
Under the settlement, approximately 3,000 Washington residents who purchased merchandise from the company will receive between $700,000 and $900,000 in restitution. Many are elderly or other vulnerable consumers who believed that purchasing products would improve their chances of winning big sweepstakes prizes.
"Each year, USPE sends out tens of millions of sweepstakes mailings nationwide, which also include offers for household goods, clothing and other consumer products," Gregoire said. "The exciting headlines and personalized wording are designed to entice people to buy things they don't want or need in hopes of winning valuable prizes."
The amount to be paid to Washington residents is part of a $30.4 million restitution fund that will be shared by consumers in the states participating in the settlement.
Gregoire called today's agreement a possible blueprint for settling lawsuits against three other sweepstakes companies that the Attorney General has accused of deceptive marketing tactics. Trial is scheduled in September with Publishers Clearinghouse, American Family Publishers and Time Inc.
"This agreement represents a significant milestone in our efforts to clean up an industry that is badly in need of cleaning up," Gregoire said. "This should send a clear message to other sweepstakes companies that it is time to stop the deceptions."
A major provision of the settlement announced today requires USPE to provide clear and conspicuous "Sweepstakes Facts" on its contest entry forms. The facts will describe odds of winning, and explain that entrants have not yet won prizes and are not required to make purchases in order to enter or improve their chances of winning.
USPE also will discontinue mailings to anyone who makes 25 purchases or spends more than $935 on sweepstakes offers in a 12-month period. The company will contact these "high activity" customers and inform them they do not have to purchase anything to win.
The agreement also requires USPE to:
- Offer a single, standard means of entering sweepstakes, regardless of purchases;
- Refrain from claiming that consumers received sweepstakes offers because they were customers or that they may receive additional sweepstakes offers if they remain customers;
- Refrain from using personalized, simulated checks to represent sweepstakes prizes;
- Fully disclose the nature and value of bonus items offered to purchasers;
- Maintain a toll-free telephone number for consumers to call if they wish to be placed on the company's "Do Not Contact" list and not receive any future solicitations.
To be eligible for restitution under the agreement, consumers must have spent at least $1,870 with USPE in any one of calendar years 1997, 1998 or 1999. Customers who are eligible for restitution will receive notices from a third-party administrator in about six months.