NEWARK, N.J. -- The American Family Publishers sweepstakes, known for the mailers that proclaim in bold type "You Are A Winner!," is getting a new slogan: "No Purchase Necessary."
American Family Enterprises, the bankrupt Jersey City company that runs the sweepstakes, agreed in a $33 million settlement to make big changes to their marketing literature to make it clear that consumers don't have to buy magazine subscriptions or other merchandise to win big prizes.Thursday's settlement covers up to 35 million people who felt duped by the sweepstakes plugged by Dick Clark and Ed McMahon, and resolves dozens of class-action lawsuits. Consumers who file claims by May 5 should begin receiving checks from the company by late summer.
The settlement also gives millions a chance to win $100,000 in a mini-sweepstakes. The company set aside $1 million of the settlement as a jackpot for 10 lucky winners in the class. Anyone who bought merchandise from a sweepstakes mailing after January 1992 is eligible.
The new sweepstakes literature will include "No Purchase Necessary" in bold type to make the rules clear to consumers, and won't use language like "You Are A Winner" unless the recipient has actually won something.
The company also agreed to provide estimated odds of winning the sweepstakes and to print contest rules in 8-point type, instead of the small print that lawyers said misled people into thinking they had won, or needed to buy something to win.
Most of the consumers spent less than $100 on merchandise, although some lost several thousands of dollars, plaintiff's lawyer Frank Jakes said.
American Family chairman Susan Caughman said the settlement shows the company's "commitment to maintaining the trust and confidence of consumers."
The U.S. Senate passed legislation last month that would require sweepstakes sponsors to make it clear that contestants don't need to buy their products to win big prizes.
A federal judge approved the settlement on Thursday. Company officials said the class-action settlement wouldn't disrupt its sweepstakes, including a $10 million drawing scheduled for Jan. 31.
In separate agreements over the last year, The company paid $6.9 million to 40 states and the District of Columbia to resolve similar allegations on sweepstakes advertising. Another major sweepstakes operator, Publishers Clearing House, has been sued by nine states over its advertising.
American Family filed for Chapter 11 bankruptcy protection earlier this year.
Consumers wishing to obtain a claim form to participate in the settlement can call 1-888-469-5408 or go to www.afpsettlement.com.