Attorney General's News Release

Augist 24, 2000

Time Inc. to make substantial changes in sweepstakes under agreements reached with Missouri, 47 other states

Jefferson City, Mo. — Time Inc., which operates one of the country's largest direct-mail sweepstakes, will make substantial changes in its contest mailings under an agreement filed today in Cole County Circuit Court, Attorney General Jay Nixon announced today. The agreement also provides for restitution for those consumers who purchased at least $500 from Time Inc. or its subsidiaries during the period of 1997 through 1999. Similar agreements were filed today in 47 other states and the District of Columbia.

"These are many of the same provisions we required in our precedent-setting agreement with United States Sales Corp. in April," Nixon said. "Time will not use misleading language that implies consumers have won, and will make it clear in its offers that consumers have not yet won. Time also will clearly let consumers know that they don't have to make a purchase to enter or win and that they may enter as often as they like. Stating these facts clearly up front will help keep consumers from making purchases just because they have been led to believe buying something helps their chances."

The agreement requires that all sweepstakes mailings provide a clear and conspicuous "Sweepstakes Facts" disclosure to consumers. The Sweepstakes Facts will include uniform statements that say:

• buying won't help the consumer win the sweepstakes;
• the consumer has not yet won;
• the consumer doesn't have to buy anything to enter the sweepstakes;
• and the odds of winning a prize.

Time sends out millions of piece of mail annually offering consumers the opportunity to enter the sweepstakes. The mailings also offer the opportunity to buy subscriptions to one of the many magazines published by Time Inc., various Time-Life books, or audio or video collections produced by Time Inc. Home Entertainment. Nixon said that some consumers in Missouri and elsewhere, particularly older people, have purchased products in sweepstakes because they believed the purchases would enhance their chances of winning.

Additionally, under the terms of the agreement, Time will not be able to misleadingly state that a consumer is the winner or about to become the winner of a sweepstakes; misleadingly tell consumers they have a better chance of winning a sweepstakes package than they actually do; or represent that the sweepstakes package has been sent by special courier or a special class of mail if it has not been.

The settlements signed by Time and the Attorneys General establishes a fund of more than $4.9 million to be used for payment to consumers who were "high activity" sweepstakes customers in any one of calendars years 1997, 1998 or 1999. Approximately $105,000 in restitution will be available to 148 such consumers in Missouri who spent $500 or more in any of those three years. Those consumers who are eligible for payments will be contacted later this year.

In addition, Time will pay the states $3.24 million for attorneys' fees and the costs of the investigation. Nixon said Missouri's share will be $100,000 because his office helped lead the negotiation; that money also will be used for consumer education efforts.

Nixon said Time also has agreed to establish a "Sweepstakes Do Not Promote List" for high-activity customers. Time will be required to stop sending such consumers new sweepstakes solicitations, if upon a review of its customer records, Time finds a customer who either:

• has a current subscription to a magazine published by Time which lasts more than five years from the date of the review, or
• has spent in excess of $500 as a result of sweepstakes promotions by any combination of Time entities or businesses.

Today's agreement is part of an ongoing effort by Nixon to compel the major sweepstakes companies to eliminate deceptive and misleading mailings, particularly those that target vulnerable consumers. In April, Missouri led the 47-state effort that resulted in United States Sales Corp. paying more than $30 million in restitution to consumers nationwide and also making significant changes to its mailings. Last year, Nixon obtained an agreement with American Family Publishers requiring that company to change its solicitations and pay restitution to high-volume customers.

The Attorney General's Office also sued sweepstakes giant Publishers Clearing House last October; that lawsuit currently is pending in Boone County Circuit Court. Earlier this week Nixon rejected a settlement between PCH and several other states, saying the settlement didn't provide enough consumer restitution or enough protection for vulnerable, high-activity customers.

A report produced by the National Association of Attorneys General (NAAG) strongly recommended that sweepstakes marketers include a "sweepstakes facts sheet" with their mailings to help consumers better understand contest odds and that purchases cannot help them win sweepstakes. NAAG issued the report following hearings the Attorneys General conducted on sweepstakes policies and procedures last year in Indianapolis.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818