Another day, another "dark patterns" lawsuit by the Federal Trade Commission — this time, in the sweepstakes arena. 

In order to settle FTC charges that it violated the FTC Act and CAN-SPAM Act, Publishers Clearing House (“PCH”) has agreed to a proposed court order that will require it to pay $18.5 million to consumers and make substantial changes to how it conducts business online, including its sweepstakes entry and sales processes.   

The FTC’s complaint centers around allegations that PCH used “dark patterns” to mislead consumers about how to enter the company’s well-known sweepstakes drawings, by, among other things: (i) conflating “ordering” products and “entering” the sweepstakes through the use of trick wording and visual interference; (ii) placing disclosures in small and light-colored font and in places where a consumer was unlikely to see them; (iii) bombarding consumers with emails that pressured them to take immediate action or purportedly risk losing the opportunity to enter or win the sweepstakes; and (iv) making it difficult for consumers to enter the sweepstakes without a purchase.  For instance, consumers could complete an “Official Entry Form” on the company’s homepage that featured a large button with phrasing like “WIN IT!”  However, instead of functioning as a sweepstakes entry form, it led consumers through pages of ads and sales pitches before they could actually enter the sweepstakes.  Even if a consumer managed to navigate this initial barrage, they were continuously sent emails implying there were additional steps required before they could actually be entered.

Of course, not only should there be no purchase required (or implied) to enter a sweepstakes, the entry process should be relatively simple and straightforward.  A consumer should not be required to navigate through what is essentially a sales presentation, or be pressured into purchasing an advertiser’s product, to enter its sweepstakes.

“This is our second dark pattern lawsuit over the last week,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.  “Firms that continue to deploy deceptive design techniques are on notice.”

In addition to these manipulative phrasing and website design practices, the FTC also alleges that PCH:

  • added surprise shipping and handling fees to the costs of products—which averaged over 40% of the product costs—after purchases were complete;
  • misrepresented that purchases were “risk free,” failing to inform consumers that they would be responsible for the cost of return shipping on unwanted products;  
  • deployed deceptive marketing emails, including with subject lines like “High Priority Doc. W-34 Issued” or “W-19 Notice – Step 3 of 3 INCOMPLETE,” which led consumers to believe the emails were related to tax forms or other official requirements; and
  • misrepresented its policies on selling users’ personal data to third parties. 

According to the FTC, PCH targeted older and lower-income consumers with these practices.

In addition to paying over $18.5 million to the FTC to be used for consumer refunds, the proposed court order would require PCH to: stop deceiving consumers about purchases and sweepstakes, including by implying that any purchase is required to enter or will increase the chances of winning; more clearly distinguish its sweepstakes entry and sales processes; make clear, conspicuous and unavoidable disclosures regarding the entry process and eligibility; cease any surprise fees; clearly disclose cancellation and return policies; stop sending emails with deceptive subject lines and other conduct that violates the CAN-SPAM Act; delete all consumer data that was collected prior to January 1, 2019; and preserve records of any market, behavioral or psychological research.

It’s not surprising the FTC would take aim at PCH given its “history of deceptive practices,” as cited in the complaint, including multimillion-dollar settlements with state AGs in 1994, 2000, 2001 and 2010 as well as a $10 million nationwide class action settlement in 1999.