FTC “Apprise Patrol” visits Publishers Clearing House to challenge company’s digital dark patterns

Most people are familiar with the Publishers Clearing House Prize Patrol and their visits to consumers’ homes to deliver those big checks. In a twist on the familiar scenario, this time the FTC is – metaphorically speaking – paying a call on Publishers Clearing House as the Apprise Patrol, apprising companies and consumers of a proposed settlement with Publishers Clearing House for multiple violations of federal law. However, a big check is still involved: an $18.5 million financial remedy for the company’s use of allegedly deceptive tactics in how it promoted its sweepstakes.

Any discussion of Publishers Clearing House’s sweepstakes practices has to start with a mention of the company’s long history of alleged consumer protection violations. The FTC complaint cites multimillion dollar settlements with State AGs in 1994, 2000, 2001, and 2010. Then there was a $10 million settlement of a nationwide class-action lawsuit. Congress looked into potentially deceptive practices by PCH and other sweepstakes companies in 1998 and 2013, and also passed the Deceptive Mail Prevention and Enforcement Act. That law requires that sweepstakes mailers clearly and conspicuously disclose “on the order or entry form, that no purchase is necessary to enter [the] sweepstakes,” and that “a purchase will not improve an individual’s chances of winning.”

In the intervening years, PCH has moved a substantial portion of its marketing efforts online, where the FTC says PCH has employed digital dark patterns to deceive people. According to the complaint, the company used “the prospect of winning lucrative sweepstakes prizes to lure consumers” – often older people with lower household incomes – “into repeatedly visiting its e‑commerce website and buying products.” The FTC says PCH misled them “into believing that they must place an order to buy products to enter a sweepstakes or that ordering will increase their odds of winning.”

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You’ll want to read the complaint for a detailed analysis of how the FTC alleges PCH used deception to lure people in, but here’s a summary of the tortuous journey consumers had to take just to enter a sweepstakes. When consumers first visited PCH’s webpage, they were presented with an “Official Entry Form” or “Official Entry Registration Form” to “WIN $5,000 a week ‘FOREVER.’” After typing in their personal information, PCH presented them with a button that says “Submit Entry!” – or in other examples, “WIN IT!” or “Win for Life!”

So at that point did PCH enter them in the advertised sweepstakes? No. As the complaint puts it, “PCH does not process consumers’ sweepstakes entries when consumers complete and submit the ‘Official Entry Form.’” Instead, the company took them through page after page of sales pitches. Only after navigating through that marketing material did PCH present them with another button that the FTC says led people to think they were finally entered in the sweepstakes.

But it didn’t stop there. Once in possession of their email addresses, PCH then sent consumers emails claiming they had to take a “final step” to claim a prize number on the “winner selection list” or be eligible to win the sweepstakes. In some instances, PCH told people if they didn’t respond, they would be “disqualified.”

So by clicking links in those emails did PCH enter them in the advertised sweepstakes? Again, no. Instead the FTC says PCH sent them back to its e-commerce site where once again people had to navigate through a deceptive loop of pitches and prompts, including a confusingly titled “Official Order-Entry Form.” According to the FTC, that’s one more tactic PCH used to further its deceptive conflation of the sweepstakes entry process and the product ordering process.

For example, the complaint charges that if consumers got to that page without putting anything in their shopping cart, PCH often displayed a message directing them back to the shopping pages. In other cases, if consumers clicked the “Enter Now” button, the FTC says the company presented them with more confusing product offers. Throughout the process, if consumers still tried to enter the sweepstakes without buying anything, PCH continued to send them confusing emails referring to “1 critical decision” or “the last step” that consumers needed to take. When consumers would click on those emails, the company made references to the fact that “We see you’ve never placed an order” and that “Just one order is all it takes to activate these customer rewards.” One screen with the bold headline “PLEASE DON’T SAY NO!” presented people with an array of merchandise to buy – including a “Kissing Moose Salt and Pepper Shaker Set.” The FTC says that people who didn’t opt for those items had to make their way through more relentless product offers in what would have to be described as a “Groundhog Day” of circular sales pitches.

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But what about the legal requirement that people can enter the sweepstakes without buying anything? As the complaint alleges, PCH did state “No purchase or fee necessary to enter. A purchase won’t increase an individual’s chance of winning.” But it was in fine print. And on the shopping pages, the disclosure appeared at the bottom and below the CONTINUE button – hardly a clear and conspicuous disclosure. 

The complaint alleges that PCH made a host of deceptive representations to consumers, including that a purchase was necessary to enter the sweepstakes, that buying something would increase their chances of winning, that they had been entered in the sweepstakes when they hadn’t, and that they would be “disqualified” if they didn’t take additional steps. The FTC also charges that for people who did order merchandise, PCH didn’t disclose the total cost of their order and made deceptive “risk-free” guarantees. Furthermore, the complaint alleges that until January 2019, PCH falsely claimed it didn’t “rent, license, or sell personal data to third parties” when it shared that information with third parties that advertised on PCH’s websites and other platforms. In addition, the FTC says PCH violated the CAN-SPAM Rule by sending marketing emails with deceptive subject lines – for example, one titled “High Priority Doc. W-34 Issued,” leading consumers to believe the message was related to a tax form or some other official requirement.

In addition to the $18.5 million financial remedy, the proposed order, which is subject to court approval, requires PCH to make clear disclosures that consumers don’t have to buy anything to enter a sweepstakes and that a purchase won’t increase their chances of winning. The order also prohibits the company from using tactics that state or imply the contrary. What’s more, PCH will have to take steps to separate sweepstakes from sales on its website. 

The proposed order bans a host of deceptive dark patterns, including false exhortations of urgency. Also prohibited: misrepresentations about the total cost of goods, deceptive statements about how the company uses consumers’ personal information, and violations of the CAN-SPAM Act.

The proposed settlement offers insights for companies that use sweepstakes and similar promotions, but even if your company doesn’t, the action conveys important advice for all businesses.

Dark patterns take many injurious forms and the FTC is committed to rooting out all of them.  The phrase “dark patterns” covers broad categories of deceptive feints, head fakes, and misdirections that have violated the FTC Act for years. As this action illustrates, digital dark patterns can be particularly harmful to consumers. Companies that want to stay out of legal hot water should strive for transparency in their transactions. Luring people in under false pretenses and then subjecting them to a relentless barrage of sales pitches until they finally cry “Uncle!” is an unacceptable business practice.

Consider a CAN-SPAM compliance check at your company.  If it’s been a while since you’ve taken a close look at your marketing emails, read the FTC’s CAN-SPAM Act: A Compliance Guide for Business. Make sure your messages still measure up.