FTC Secures $18.5 Million Settlement and Order In Another 'Dark Patterns' Case

On the heels of its lawsuit against Amazon.com, the FTC filed a complaint yesterday against PCH, the marketer behind the venerable Publishers Clearinghouse organization. The complaint alleges that PCH used various deceptive tactics (so-called "dark patterns") to induce consumers to pay for magazine subscriptions and other merchandise, in violation of federal law. The bait in this long-running scheme was convincing consumers, many of whom are elderly, that they had to buy products to receive sweepstakes entries. It is a fundamental tenet of federal law (and many state laws) that one cannot condition sweepstakes entry on the need to pay any consideration. Doing so transforms the sweepstakes into an illegal lottery. It is not illegal to solicit a sale in connection with a sweepstakes, but it must be made clear to the consumer that there is a free and relatively easy-to-use alternative method of entry (AMOE).

While the FTC's complaint against Amazon is more tenuous for reasons I explain here, the complaint against PCH is very solid. If there were a paradigm "dark pattern" case, this would appear to be it. The advertiser not only solicited full contact information from the consumer under false pretenses that it would result in immediate sweepstakes entry, the advertiser subsequently bombarded the consumer with repeated screens linking entry to various product offers. The consumer was goaded into buying in hopes that it would increase the chances of winning.

The complaint shows screenshots for many of these screens, and, individually, each could be defended as not stepping over the line. However, as a collective marketing tactic, it seems likely that they would induce the average consumer to think that buying products from the advertiser would increase the number of sweepstakes entries received.  

This is not the first time that PCH has been sued for similar conduct. The FTC complaint reviews PCH's checkered history in some detail. The company has been sued, and settled, numerous times -- each time agreeing to cease using deceptive tactics linking sweepstakes entries to product sales. While the prior cases famously involved hard copy mailings, PCH has since largely migrated its business online. While the latest incarnation of the PCH website appeared to pay lip service to these undertakings, it is not hard to see how the forest was lost for the trees. While each screen might be defensible on its own,  the totality of the interactions with the consumer reflects a litany of legally questionable pressure tactics and insinuations. Perhaps this is why PCH has apparently agreed to settle, rather than litigate. 

Sometimes, even though fine, technical arguments can be made to justify selling tactics, the advertiser should take a step back and consider how an adverse party would portray the net effect of the entire set of consumer interactions. Liability is triggered not only by express statements but by reasonable implications that are misleading.