• by Wendy Davis  @wendyndavis, June 27, 2023

Publishers Clearing House has agreed to pay $18.5 million to settle charges that it used “dark patterns” to trick consumers into making purchases, according to court papers filed Tuesday in Brooklyn federal court.

If approved, the settlement will resolve a Federal Trade Commission complaint filed Monday alleging that Publishers Clearing House used “deceptive and manipulative statements and user interface designs ... to deceive consumers into believing that they must order products before they can enter a sweepstakes or that ordering products increases their odds of winning a sweepstakes.”

In addition to the financial penalty, the settlement requires the direct-marketing company to follow a number of conditions regarding its marketing efforts.

Among others, the company must “clearly and conspicuously” display the following statement immediately above any call to action: “I understand that I don’t have to buy anything to enter the Sweepstakes and that buying won’t help me win.”

The settlement also provides that the phrases “I don’t have to buy anything,” and “buying won't help me win” must appear in bold.

Publishers Clearing House did not admit wrongdoing as part of the proposed settlement.

The case marks the second time this month that the FTC has alleged that a company used “dark patterns” -- generally defined as manipulative user interfaces -- to dupe consumers.

Last week, the FTC charged Amazon with tricking people into purchasing Amazon Prime subscriptions, and then thwarting people's attempts to cancel.

While the complaint is focused mainly on allegations that Publishers Clearing House designed its website and marketing emails to mislead consumers, the FTC also includes allegations that the company misrepresented its privacy practices.

That claim centers on allegations that Publishers Clearing House promised that it wouldn't “rent, license, or sell” personal data, but then transmitted consumer data to third parties, which used the information for targeted advertising.

“Until on or about January 2019, defendant has represented, directly or indirectly, expressly or by implication, that it does 'not rent, license, or sell personal data to third parties.'” the FTC alleged. “In truth and in fact, before January 2019, Defendant did rent, license, or sell consumers’ personal data to third parties including, but not limited to, other marketing and advertising partners and media intermediaries who used the information to target consumers with third-party advertising on [Publishers Clearing House's] websites and other third-party platforms.”

Christopher Irving, Publisher Clearing House vice president for consumer and legal affairs, stated Tuesday that the company disagrees with the FTC's allegations, but agreed to settle the matter to avoid the “expense and distraction” of litigation.

He added that around 98% of consumers who browse the company's offerings and enter a sweepstakes don't make a purchase. “The majority of our millionaire winners never ordered with their winning entries,” he stated.