Publishers Clearing House is a direct marketing company that markets
merchandise and magazine subscriptions with sweepstakes, prize-based game,
search, and lottery websites. Publishers Clearing House was founded in
1953 by Harold Mertz to replace door-to-door magazine subscription sales
by a single vendor offering multiple subscriptions by mail. It introduced its
sweepstakes in 1967. In the early 1990s the company was the subject of concerns
and legal actions regarding whether consumers were misled about their odds
of winning the sweepstakes and whether purchases increased their chances. By
2010 the company had reached settlements with all 50 states.
The company acquired search company Blingo in 2006, online gaming company
Funtank in 2010, and mobile marketing company Liquid Wireless in 2012.
History = Early history =
Publishers Clearing House was founded in 1953 in Port Washington, New York, by
Harold Mertz, a former manager of a door-to-door sales team for magazine
subscriptions. The company started in Mertz's basement with help from his wife
LuEsther and daughter Joyce. Its first mailings were of 10,000 envelopes from
Mertz's home in Long Island, New York, and offered 20 magazine subscriptions.
100 orders were received. Within a few years the company moved out of Mertz's
basement into an office building and started hiring staff. When Publishers
Clearing House moved its headquarters in 1969, its prior location was donated to
the city and renamed the Harold E. Mertz community center. The company revenue
had grown to US$50 million by 1981, and $100 million by 1988.
In 1967 Publishers Clearing House started its first sweepstakes as a way
to increase subscription sales, based on the sweepstakes held by Reader's Digest.
The first prizes ranged from 25 cents to $10 and entrants had a 1 in 10 chance of
winning. After the sweepstakes increased response rates to mailings, prizes of
$5,000 and eventually $250,000 were offered. PCH began advertising the
sweepstakes on TV in 1974. It was the only major multi-magazine subscription
business until 1977. Former client Time Inc. and several other publishers formed
American Family Publishers to compete with Publishers Clearing House after the
company refused repeated requests by Time for a larger share of sales revenue
from magazine subscriptions. American Family Publishers and
Publishers Clearing House competed for exclusive rights to magazines and for
the better promotion and prize ideas. When American Family Publishers
increased their jackpot to $1 million, then to $10 million in 1985, Publishers
Clearing House raised its prizes to match. $7 million in prizes were
distributed by 1979, $40 million by 1991 and $137 million by 2000. In 1988 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."
In 1992 thousands of discarded sweepstakes entries from contestants who
had not bought magazine subscriptions were found in the trash by city
employees, reinforcing beliefs that the company favored those who made purchases
in selecting a sweepstakes winner. Publishers Clearing House said this was
done by a disgruntled employee at their mail processing vendor. A class action
ensued, which PCH settled by giving discarded entrants a second chance to
win. = Government regulation =
In the 1990s Publishers Clearing House and its primary competitor, American
Family Publishers, experienced a series of legal troubles due to concerns that
their mailings misled consumers about their odds of winning and implied that
magazine purchases increased their chances. This led to the Deceptive Mail
Prevention and Enforcement Act of 2000, which regulates direct mail businesses.
At the senate hearings regarding this Act, Publishers Clearing House said most
consumers were not confused about their chances of winning or that purchases did
not increase their chances. The company said less than five percent of
participants spend more than $300. Government officials from California
said 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. Industry sources estimated Publishers
Clearing House's response rates decreased by 7-12 percent and its sales
volume by 22 to 30 percent in response to the bad publicity from the lawsuits.
In 2000, Publishers Clearing House laid off a quarter of its 800-person work
force. Lawsuits
In 1994 Publishers Clearing House sent mailings telling recipients they were
all "finalists", which led to a lawsuit involving the attorneys general of 14 US
states. Later that year, Publishers Clearing House denied wrongdoing, but
agreed to pay a settlement of $490,000 and to change their practices. Under the
agreement, Publishers Clearing House said it would define terms like
"finalist" and disclose the chances of winning.
In 1997, a contestant of competitor American Family Publishers flew to
Tampa, Florida thinking he had won, though he had not. The resulting
publicity caused more lawsuits for both companies. Publishers Clearing House
reached a $30 million national settlement in 1999. In 2000, another $18
million settlement was reached with 24 states, after the company sent mass
mailings that said "You are a winner!" and used mock personalized checks.
Publishers Clearing House agreed to avoid similar mailings in the future,
and add a "sweepstakes fact box" to mailings.
State attorneys spoke out against the national settlement from 2000 and
additional lawsuits were filed by individual states. Another $34 million
settlement was reached in 2001 in a lawsuit involving 25 states. As part of
the settlement, Publishers Clearing House was required to avoid terms like
"Guaranteed Winner," add disclaimers to mailings saying that the recipient has
not won and that purchasing merchandise won't increase their chances. Publishers
Clearing House reached settlements with all fifty states and agreed to work with
a "compliance counsel." Publishers Clearing House apologized in the
settlement and said it would contact customers who had spent more than $1,000
on merchandise the prior year". Publishers Clearing House also reached
an agreement with Iowa in 2007. 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 ombudsperson and a
compliance counsel who would review its mailings quarterly.
In April 2014, an investigation by the Senate Special Committee on Aging
concluded that Publishers Clearing House had "pushed the limits" of prior
agreements and that additional legislation may be needed.
= Online development = Publishers Clearing House began selling
merchandise in 1985 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. The
company also shifted its focus online. It began selling magazine subscriptions
and merchandise on PCH.com in 1996. In 2006, it acquired Blingo Inc., an
ad-supported search engine that was later re-branded as PCH Search and Win.
Publishers Clearing House 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 PCHGames.com and PCHQuiz4Cash, with air-hockey and video
poker games. In December 2010, Publishers Clearing
House acquired Funtank and its online gaming site Candystand.com. In 2011,
Publishers Clearing House promoted a "$5,000 every week for life" sweepstakes
in TV ads and the front page of AOL.com. The following year the company acquired
a mobile marketing company, Liquid Wireless. The company utilized, then
stopped then started again utilizing coregistration to expand its customer
base. 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.
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."
Products Publishers Clearing House is a
direct-marketing company that sells merchandise, magazine subscriptions and
operates several prize-based websites. While best known for the sweepstakes and
Prize Patrol it uses to promote its magazine subscriptions, the majority of
the company's revenue now comes from merchandise. The company has been
selling books, media, jewelry and other consumer items since the 1980s.
Publishers Clearing house operates eight websites, including PCH Search and Win,
PCH Lotto, PCH Games, PCH Save and Win, and Candystand.
The company also sells magazine subscriptions at a discount and
advertises subscriptions along with its sweepstakes. It's estimated that
companies like Publishers Clearing House keep 75-90 percent of the fees from the
original subscription, while publishers use the increased distribution to
improve circulation numbers and revenue from renewals. Publishers Clearing House
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. Documents filed
with the New York State Department in 1993 said that year the company mailed
220 million envelopes. Frequent buyers can receive 30-40 mailings a year.
Sweepstakes Although Publishers Clearing House
advertises its sweepstakes along with magazine subscriptions, no purchase is
necessary to enter or win. In 1995, Publishers Clearing House began the
tradition of announcing winners of its $10 million prize just after the Super
Bowl. As of 2012, $225 million in prizes have been distributed. Some of its
larger prizes are for $5,000 a week for life, or $10 million. As of the fall of
2015, a prize of $10,000 weekly is also offered. Prizes can also range from $1
Amazon gift cards to $2,500, $1 million or $3 million.
Sweepstakes scammers often pose as being from Publishers Clearing House and say
that a cash payment is needed before they can deliver a prize. According to
Chris Irving from Publishers Clearing House "If you are contacted by anyone
claiming to represent Publishers Clearing House and they request payment
of any amount to collect a prize, do not send any money... You have not heard
from the real Publishers Clearing House."
The odds of winning a Publishers Clearing House sweepstakes vary
depending on the number of entries and what prize or sweepstakes is involved.
According to the official rules, the estimated odds of winning the $1 million
a year forever are one in 1.3 billion. As of 2015, the odds of winning the
$7,000 a week for life prize is 1 in 1.7 billion. The odds of winning the $10
million prize were one in 505 million in 2008 and one in 1.5 billion in 1995.
Smaller prizes have better odds that may vary from one in 223 to one in 80,000,
depending on the prize. = Prize Patrol =
The Prize Patrol surprises sweepstakes winners at their homes, work or other
locations with cash prizes and captures the event on video. 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. 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. The Prize Patrol has made in-person
appearances or delivered prizes on TV shows like The Oprah Winfrey Show and
The Price Is Right. Their surprise winning moments have been spoofed by Jay
Leno, Conan O'Brien and the cast of Saturday Night Live; woven into the
plots of movies such as Let's Go to Prison, The Sentinel and Knight and Day;
and the subject of cartoons. See also
List of New York companies References
External links Official website