48 states, D.C. reach settlement with Time Inc. over sweepstakes

Posted: Friday, August 25, 2000

PROVIDENCE, R.I. (AP) -- Time Inc., among the nation's largest sweepstakes promoters, announced an $8.2 million settlement Thursday with 48 states, including Alaska, and the District of Columbia over direct marketing that attorneys general charged were deceptive.

Consumers who bought more than $500 in subscriptions, audio or video collections, or Time-Life books while entering the contest will share part of the payment. The rest of the settlement will be used to cover states' legal fees, Attorney General Sheldon Whitehouse said.

As part of the deal, Time will include a ''Sweepstakes Facts'' disclaimer in its tens of millions of mailings clarifying that consumers haven't yet won and don't have to buy anything to enter the sweepstakes. Odds of winning also will be included.

''We want to ensure the consumers, especially senior citizens, are not confused or misled by the documents,'' said J.O. Alston, a civil litigator in Whitehouse's office.

Connecticut and Iowa are the two states that didn't join the negotiations.

The announcement comes two days after Publishers Clearing House and two dozen states and the District of Columbia reached an $18 million settlement over that company's sweepstakes promotions.

Negotiations between Time and the attorneys general began several months ago.

''We have always striven to market our products in a clear and straightforward manner and we feel that includes our use of sweepstakes,'' Time spokesman Peter Costiglio said. ''Nevertheless, we were willing to discuss concerns with the attorneys general about the sweepstakes.''

The settlement covers customers who spent more than $500 while entering the sweepstakes in 1997, 1998 or 1999. A fund to pay consumers will be established with $4.9 million of the settlement. The remaining $3.24 million will cover state legal fees.

Nationwide, 6,700 households are eligible for some relief, Costiglio said.

Under the agreement, Time Inc. cannot say a consumer is about to be a winner or misrepresent the odds of winning and cannot say the mailings were sent by special courier or special class if they weren't.

Time also has agreed not to send new sweepstakes promotions to consumers who hold current subscriptions lasting more than five years, or to customers who have spent more than $500 on Time products as a result of sweepstakes mailings.

Whitehouse is pursuing settlements against other sweepstakes promoters, including an agreement with Publishers Clearing House that is separate from this week's deal, Alston said.


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