How Publisher’s Clearing House (PCH) created a “legitimate” multi billion dollar business out of defrauding the elderly and children.
If you were a child of the 80’s or 90’s living anywhere in the USA then you need no introduction to Publisher’s Clearing House (PCH). You may recall those iconic manilla-envelopes with bold-lettered proclamations about winning cash prizes. Often, their mailers exposed check-like printed paper through a see-through cellophane address window. Maybe you were drawn to their fun-colored, sticker-like magazine subscription stamps. All this could be enough for an innocent young mind to dream of his or her family winning PCH. Is it the same psychology behind the immoral practice of children-targeted marketing by tobacco, fast food, and mobile gaming companies? After all, youth targeting is an accepted part of PCH’s marketing strategy today.
PCH has been the subject of many lawsuits for deceptive marketing. This shows the company as another example of mass fraud as a criminal enterprise. It also fits the bill for senior fraud, freemium fraud, and fraud against children.
Publisher’s Clearing House is a criminal enterprise because it is mass fraud posing as a legitimate business. As the FP101.net course states, “For a long fraud, they have to play the long game. [Fraudulent businesses] all use corporate fronts with billions of dollars in political lobbying and plenty of brilliant lawyers to create a legitimacy and respectability.” As a billion-dollar business, you can guarantee that PCH is not short of lawyers and lobbyists ready to come to its defense. It has survived and thrived despite numerous lawsuits in its 65-year history.
PCH began in 1953 as a magazine sales company. By 1967 it had morphed into the sweepstakes company that we know and loathe today. For over 25 years, the business crafted the direct mail marketing tactics that would result in a string of lawsuits starting in the 90’s. Customers from 1992-1999 received a multi-million dollar settlement of a federal racketeering lawsuit. Their loss was caused by the company’s deceptive marketing. The lawsuit claimed that PCH misled consumers into believing purchases improved their chances of winning. A condition of the settlement required the company to clarify that no purchases were necessary for sweepstakes entry.
One victim of the PCH lawsuits of the 90’s was an 85-year-old retiree. He ended up using his pension and social security to pay for his $20,000 PCH magazine subscription debt. His debt had mounted so high that he had to return to the workforce as a janitor to make ends meet. No one should have to spend their golden years cleaning toilets. This was back in 2000 after another massive PCH settlement. A family member of the elder told ABC News, “The most important thing is that they’re stopping [PCH] from exploiting the elderly and others who can’t tell its’ a scam.” But apparently, they did not do enough to change their deceptive marketing. In April 2018, almost 20 years later, PCH was again being sued for fraud against the elderly. According to The New York Daily News, the lawsuit “accuses the company of deceiving its many elderly customers, and tricking them into buying stuff they don’t need.” Seniors were convinced that they were near winners from PCH’s fake checks and “you have already won” marketing tactic.
Curiously, one day after the lawsuit was publicized, the FTC published a PCH fraud alert on their blog—but PCH wasn’t the perpetraitor. Instead, there was an alert against PCH imposters. The advisory describes how PCH imposters “send you a realistic-looking fake check in the mail.” It warns against the same scams that the PCH mentions on their website. PCH dedicates an entire page called their “Fraud Protection section”. If a potential recipient of the 2018 class-action researched online for “PCH fraud with fake checks”, the results might be unclear. Both the PCH imposter scam and PCH senior fraud would turn up in search results due to their close dates. Might an elderly citizen conflate the two fraud stories? Was that a deliberate attempt to throw folks off-track or an unfortunate coincidence?
While seniors are the named victims under the current lawsuit, they are not the only ones targeted by PCH marketing. In 2008, PCH expanded into mobile gaming territory. The New York Times reported that the company was “hoping to gain young fans with the contests, where it is offering prizes worth $100 to $2,500.” Their gaming platform features virtual slot machines and trivia games. Gamers play for points that are redeemable on a prize wheel to earn more points or other prizes. PCH Online Network VP, Alex Betancur said, “The objective is to bring young customers into PCH’s world.” These marketing efforts were spun as a reinvention of PCH. Instead, they should have been frowned upon. Their marketing, which uses the shady freemium gaming model, is nothing to celebrate.
A long-time director of the Campaign for a Commercial-Free Childhood, Susan Linn, says “There’s no moral, ethical, or social justification for marketing any product to children.” Assuming this to be true, PCH represents the worst of the worst. It is not far-fetched to say that Publisher’s Clearing House is the father of freemium fraud—a harmful marketing practice destroying young lives.
PCH is the owner of PCH Games, formerly known as Candystand. It was the first major online gaming platform with advertisements. Banking on its long-established “free to play” model of sweepstakes entries, PCH turned to digital games. But instead of hooking the elderly into an addiction of magazine subscriptions, PCH reels in the youth through dangerous addictive gaming. The company is the owner of Fancy Pants Adventures, a freemium game. In 2009, the game was nominated in Nickelodeon’s Most Addicting Games Showdown.
Freemium games are deceptive in their use of the term “free.” Everyone likes the idea of free. Free things are enticing because people feel that they are getting a great deal and have nothing to lose. So “free” is a magnet for kids who legally cannot generate income to pay for things themselves. Freemium games reach children and nurture addiction through rewarding gameplay. The games stop being free once payment is needed to advance levels in a game or acquire tools to improve gameplay. This is how games like Angry Birds, which started out free, are able to make hundreds of millions each year. It is the same way that Candy Crush Saga pulled in nearly $2 billion in its first year alone.
In June 2018, The World Health Organization (WHO) declared gaming addiction a mental health condition. Dr. Vladimir Poznyak of the WHO said that the impact of gaming disorder can include, “disturbed sleep patterns, like diet problems, like a deficiency in the physical activity.” All of this can affect “personal, family, social, and educational” functioning. Some parents have referred to this crisis as “digital heroine”. FP101 discusses the physiology behind the freemium gaming addiction with “the dopamine effect”.
Dopamine is the chemical in your body behind addiction. FP101 mentions that “wealthy corporations have figured out a way to remotely trigger an addictive chemical in the human brain and are using this knowledge to engage in a global mass fraud systemic.” This is what Publisher’s Clearing House is doing through their youth-targeted online games. Its online success is what has allowed the company to reach the billion dollar business milestone in 2017.
Some might argue that Publisher’s Clearing House does not count as a fraud because real people can win. PCH spokesman, Christopher Irving, said, “Since 1953, Publishers Clearing House has awarded over $385 million in prizes and awards from coast to coast, and we are pleased to have millions of satisfied consumers who welcome the PCH brand into their homes.” It’s important to note what makes PCH a scam. The scam is not about whether PCH actually distributes money. They do. The scam is the deceptive marketing practices that they use to do so. They mislead people with false prospects about winning.
Another disturbing aspect of PCH is the amount of consumer data they collect from their 15 million registered users. “They’ve got a large customer base that’s really willing to give their data. They’ve got people’s names, addresses, ages. People are very comfortable. It’s very direct and open, and they’re able to target them with advertising,” says Mike Shields, an advertising editor. When you consider PCH’s online gaming dominance and what developers are able to do with consumer data, it is troubling. An anonymous freemium fraud developer blew the whistle on TouchArcade about how data is used in the gaming world.
“This is about how we can target you, because we (and our partners) know everything about you. We know where you live, we know your income level, we know your relationships, your favorite sports teams, your political preferences. We know when you go to work, and where you work. We can target an event to start for you when we know you have a long weekend coming up. We own you…Every time you play a free to play game, you just build this giant online database of who you are, who your friends are and what you like and don’t like. This data is sold, bought and traded between large companies I have worked for. You want to put a stop to this? Stop playing free games.”
Between its data collection practices and its marketing practices, Publisher’s Clearing House raises many eyebrows. As you can see, lawsuits against PCH didn’t result in curbing their cons against seniors. Rather, they expanded and refocused their targeting to another population—youth. Despite the corporation’s legal battles, they show no indication of stopping their scams anytime soon. So how can the elderly, youth, and other individuals truly protect themselves against PCH fraud and not just PCH imposter fraud?
The best way to protect oneself against the Publisher’s Clearing House scam is to know where to draw the line. Here are 6 tips to avoid becoming a victim:
Create a hard rule for “free”. After the lawsuits of the 90’s, PCH was required to state that no purchase was necessary to enter their sweepstakes. Know that purchases will not increase your odds, so do not buy anything. Tamar Howard, recipient of PCH’s “Forever” Prize, claims she made no purchases to win. “I never bought anything to win,” she said. Keep in mind that sending mail includes material costs like stamps and envelopes. That adds up over time.
Recognize the psychology they are using against you in their marketing materials. With their mailers they go to great lengths to scare people into action. Notices in bold print with warnings and alerts are designed to trigger you. It all goes back to the dopamine effect. Don’t fall for it.
Understand that celebrity or media presence does not mean it’s not a scam. Trusted showman, EdMcMahon, was a spokesperson for American Family Publishing, a PCH-like business. People often associated his presence with PCH. PCH was affiliated with NBC Nightly News with Brian Williams and it is now connected with Entertainment Tonight (ET) where it announces its winners. It is easy to think that because a known celebrity or media is affiliated with a company then it can be trusted. This couldn’t be further from the truth.
Know your odds. Even if the mailers make it appear that you’re close to winning, knowing the odds can help you maintain a realistic perspective. The odds for the largest Powerball jackpot ever was one in 292 million. Near impossible. PCH’s odds are even worse. For their $1,000 a Day For Life sweepstakes, the odds are one in 6.2 billion. Are these odds worth your time?
Avoid playing their sweepstakes altogether. One of the tell-tale signs of a scam is its complexity. Their mailers are notorious for their multi-step confusing sweepstakes entries. If something seems unclear or hard to understand that involves payment, don’t proceed.
Remove the temptation. You can opt out from unsolicited mail for up to five years. You can call 1-888-5-OPT-OUT or visit www.optoutprescreen.com.
Following these simple tips is just a start toward fraud protection. Effective fraud prevention against predators such as PCH can only come from legislation because warnings are not enough. Victims just don’t know any better. Don’t hold your breath waiting for the politicians to act, just spread the word instead.