Publishers Clearing House agrees to pay $18.5M to settle FTC lawsuit 

Publishers Clearing House, the Jericho-based sweepstakes and magazine subscription company, has agreed to pay $18.5 million to resolve a lawsuit filed by the Federal Trade Commission, the agency announced.

The lawsuit charged that PCH used "dark patterns" — misleading phrases and website design — to persuade consumers that they needed to buy a product to enter a sweepstakes or increase their chances of winning.

When disclaimers and clarifying information were included on PCH webpages, they were in a small, light font that could easily be overlooked by consumers, according to the FTC.

The agency also alleged that the company tacked on shipping and handling fees to the cost of goods and until January 2019 misrepresented its practices on the sale of personal data to third parties.

The FTC said the $18.5 million would be distributed as refunds to consumers and that PCH would be required to:

• Stop implying that a purchase is required to enter a sweepstakes or increases the chances of winning;
• Separate sweepstakes from sales on online pages;
• Disclose the full price of items for sale along with additional shipping and handling fees, which averaged more than 40% of the product costs;
• Preserve records of the company's research into consumers' market or psychological behavior.

"Today’s action builds on previous efforts to crack down on companies that use illegal dark patterns to fuel digital deception and harm consumers," FTC Chair Lina M. Khan said in a statement joined by two other agency commissioners. "As more commerce has moved online, companies are increasingly able to layer on a host of sophisticated tricks more frequently and at a much larger scale than traditional brick-and-mortar retailers."

Though it agreed to the settlement, a spokesman for PCH denied that its customers had been coerced to buy products.

"While the FTC raised questions about the understanding of the well-known no purchase necessary messages in our e-commerce promotions, the facts demonstrate consumers fully grasp this important rule," Christopher Irving, PCH vice president for consumer and legal affairs, said in a statement. "Far from being what the FTC calls a 'dark pattern,' on any given day, roughly 98% of consumers who browse PCH’s value driven merchandise offerings and enter do so without buying anything."

PCH has been involved in previous skirmishes with regulators, including a 2000 lawsuit filed by 23 states and a 2001 lawsuit filed by 26 states. Both lawsuits resulted in multimillion-dollar settlements.

Earlier this month, the FTC filed a lawsuit against Amazon.com for allegedly using "dark patterns" in its online interface to trick millions of consumers into enrolling in subscriptions for its Amazon Prime service.

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.