Reader’s Digest Sweepstakes Tactics Hard to Swallow

Reader’s Digest has agreed to pay $196,000 to settle a dispute with the state of Connecticut over deceptive marketing of its sweepstakes. The popular magazine, found in supermarket aisles and dental offices everywhere, promoted its sweepstakes by claiming that purchasing more company products increased an entrant’s chances of winning. The actual odds of winning the sweepstakes were not affected by such purchases (unless one considers the “winner” to be Reader’s Digest, which derives about 75% of its revenue not from magazine sales, but from these ancilliary products).

Connecticut’s Attorney General sued Reader’s Digest on behalf of consumers, and focused on seeking restitution for “high activity” consumers – those who spent more than $2,500 a year on Reader’s Digest products between 1997 and 2000. The settlement money is intended to go right back into the hands of the consumers that were deceived, through a claims administration process.

In addition to the settlement, the Attorney General secured an injunction preventing Reader’s Digest from engaging in deceptive marketing practices for its sweepstakes in the future. From now on, Reader’s Digest agrees to disclose the odds of winning, set forth clear entry deadlines, inform consumers that purchases do not increase the likelihood of winning, and clearly state in all solicitations that consumers have not yet won a prize.

Reader’s Digest resolved similar claims with 33 other states in 2001 in a multi-state settlement.

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