American Family Publishers has been in the news recently regarding the latest lawsuits about its promotion practices and deceptive advertising practices. This article was recently found using InfoSeek.

Sweepstakes Firm Reaches Deal with 32 States
07:01 a.m. Mar 17, 1998 Eastern

JERSEY CITY, N.J. (Reuters) - Sweepstakes company American Family Publishers says it has reached an agreement with 32 states to change the way it promotes its contests, such as reserving use of the term ``winner'' for those contestants who have actually won.

The company, which uses celebrity spokesmen Dick Clark and Ed McMahon, also will pay a total of $1.25 million to 26 states under the voluntary consent agreement, said spokeswoman Margo DeWitt.

The agreement was reached with 32 states and the District of Columbia.

It sets stricter standards for use of the terms ``winners'' and ``finalists.'' Lawsuits against the company have complained that American Family uses the word ``winner'' in mailings to people who have not in fact won.

The agreement clarifies that ``we can't use the word winner if you haven't actually won, but we're allowed to say you're a winner if you have the winning number,'' the spokeswoman said.

The company, part of Jersey City, N.J.-based American Family Enterprises, also will prominently display its policy that no purchase is necessary to enter its contests, she said.

A giant marketer of magazine subscriptions, the company mails sweepstakes promotions to more than 200 million people each year.

Its pitchmen are McMahon, best known as talk show host Johnny Carson's sidekick for three decades, and Clark, the former host of television's ``American Bandstand'' show.

The voluntary agreement does not settle any of several lawsuits pending against the company, DeWitt said.

Those suits allege deceptive advertising practices, complaining that the mailings indicate recipients are just a step away from winning and that only the small print says one need not order magazines to be eligible to win.

Connecticut filed a lawsuit in February against American Family, Clark and McMahon, contending that the company's mailings were deceptive and misleading in suggesting the recipients had won $11 million.

Earlier this year, consumer advocacy lawyers filed a class-action suit complaining that the company sent out misleading publicity about an $11 million sweepstakes.

And in a suit filed in Florida, a group of contestants said the company told them they had won its sweepstakes and then failed to pay off.

``This does not settle any lawsuits, but we hope these initiatives will help reach an agreement with all those other states and the class action suit,'' DeWitt said.

Several states -- Connecticut, Florida and Indiana -- did not join the settlement.

``We're not joining the settlement because it does not sufficiently protect consumers or recognize the outrageous and deceptive nature of the most recent mailings by American Family Publishers,'' Connecticut Attorney General Richard Blumenthal said in a statement. ``We intend to pursue our own action vigorously and expeditiously.''

American Family is part-owned by New York-based entertainment giant Time Warner Inc. It has awarded more than $70 million in cash prizes in the last 20 years, the spokeswoman said.

Also under the agreement, American Family will set up a toll-free telephone number and a Web site for consumers to obtain sweepstakes information. It also will publicize how consumers can have their names removed from its mailing lists.

Copyright 1998 Reuters Limited.