American Family Publishers has agreed for the first time to compensate consumers who bought magazines thinking the purchase would improve their chances of winning the company's sweepstakes, officials said Monday.
Under the deal, New York Atty. Gen. Dennis C. Vacco would distribute $750,000 from the company to about 12,000 New Yorkers--about $60 each--for subscriptions bought in what authorities consider a deceptive promotion campaign.
The Jersey City, N.J.-based company also promised to eliminate potentially misleading claims and print the odds of winning as conspicuously as the promise of a prize.
Featuring celebrity spokesmen Ed McMahon and Dick Clark, the company's promotions are mailed to about 200 million people annually.
In March, American Family Publishers reached a $1.25-million settlement with 32 other states and the District of Columbia, with the money going to the government.
The agreement with New York marks the first time the company is reimbursing subscribers, Vacco said.
"We believe we have provided a cookie-cutter model in the form of this agreement for other states to follow that is a heck of a lot better than the March agreement by other states," Vacco said.
American Family Publishers admitted no wrongdoing and maintained that its mailings are not misleading.
Spokeswoman Margot DeWitt said the company has awarded $77 million in cash and more than $250,000 in smaller prizes since it started in 1977 to pitch magazines to consumers.
"The integrity of the sweepstakes has never been in question," she said. "The sweepstakes offers consumers a fantasy and they're fun, and that's why people like to play."
New Yorkers eligible for the settlement are those who bought at least six subscriptions between November 1996 and November 1997 and an additional subscription in the two months that followed, Vacco said.