PCH and the FTC reached a deal resulting in the company paying an $18.5 million settlement. This was due to the FTC's claim that PCH had engaged in deceptive and illegal practices, such as the utilization of "dark patterns." In addition, last week the FTC also took action against Amazon for a similar offense with respect to Prime subscriptions. It is uncertain at this point how many customers will be recompensed and when they will receive reimbursement. The funds from the settlement agreement with PCH will be used to provide refunds.
Publishers Clearing House has reached a settlement with Federal Trade Commission in which they will refund $18.5 million to customers and make modifications to their online business approaches. The FTC had accused them of using dark patterns and unfairly charging hidden fees. It is unknown how many customers will receive a refund or when the refunds will take place. PCH did not respond to a request for comment on the settlement or the allegations.
Last week, the FTC took action against Amazon for allegedly using "dark patterns" in an attempt to compel people to sign up for its Prime service without their consent. According to the FTC, dark patterns are "manipulative" and illegal design tactics, such as pre-checked boxes, hard-to-find and hard-to-read disclosures, and complex cancellation policies – risks that are particularly high for online consumers. Samuel Levine, director of the FTC's Bureau of Consumer Protection, stated that the PCH lawsuit is the second involving such deceptive design techniques, and warned that companies that continue to use these deceptive practices will be held accountable.
In the PCH case, the FTC asserted that the company utilized phrasing and website design which misled people into believing they had to acquire a product to have the chance to win a prize or to better their chances of winning. Along with this, the agency stated that the clarifying information provided was of a small font and not observed by purchasers. Besides sweepstakes, PCH also sells goods and magazines. The FTC contended that the hidden fees they charged amounted to more than 40% of the cost of the products, in addition to using misleading language in email subjects and statements in their privacy policy.
PCH agreed to pay the FTC $18.5 million in response to charges alleging violation of the FTC Act and CAN-SPAM Act. This money will be used to refund affected consumers. Additionally, the company is prohibited from utilizing deceptive language in sweepstakes and sales, and must cease using surprise fees and other prohibited practices. The FTC notes that consumers may not be aware of the manipulation or deception they are facing in the form of dark patterns. Such examples include faked-reviews, false low-stock messages, and a false countdown clock that supposedly creates a sense of urgency, but merely resets after a certain amount of time.
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