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American Family agrees pay 32 states $1.25 million

Sally J. Taylor and Associated Press

Mailboxes will no longer be stuffed with letters featuring Ed McMahon and Dick Clark that say ”You’re our newest winner.”

Under an agreement announced Monday, American Family Publishers will stop promoting its sweepstakes with that slogan, and pay a total of $1.25 million to 32 states including California and Nevada.

Allene Zied, 84, was one of several South Lake Tahoe residents and people nationwide who “raised a fuss” about the deceptive letters that suggested they had won at least $50,000.

“That’s great,” Zied’s daughter, Leslie, said of the settlement. “But I think they should also pay the people what they feel they won.”

Although the publishers told Zied they would take her name off the mailing list, she has already received another sweepstakes entry with new wording.

Under the agreement, the company cannot tell consumers they are ”winners” or have already ”won” a prize unless that has happened. AFP also must tell consumers that they do not have to buy a magazine subscription to enter the sweepstakes.

The company’s promotions feature McMahon and Clark, and are mailed to 200 million people each year. The company is half owned by Time Inc. Home Entertainment, a subsidiary of Time-Warner Inc., and half owned by private investors.

In January, an 88-year-old man from California flew to Tampa, Fla., for the second time in the mistaken belief that he could collect his sweepstakes winnings there.

“Based on their advertising practices, we felt (the investigation) was something that needed to be done,” said Matt Ross, a spokesman from California Attorney General Dan Lungren’s office. “As long as (American Family Publishers) keeps up their side of the agreement, we’re happy.”

AFP admits no wrongdoing in the agreement, which does not prevent the states from suing it.

On Friday, the company announced its own program that goes ”above and beyond the agreement,” spokeswoman Margot DeWitt said. It promises to display prominently the ”no purchase necessary” and money-back guarantee.

The agreement, signed March 10, does not include several states that have already sued the Jersey City-based company, including Connecticut, Florida and Indiana. Also not included are South Carolina, which is planning to sue, and Maryland, where a class-action lawsuit has been filed.

These states participating in the agreement will get $50,000 from AFP: Arkansas, Arizona, California, Hawaii, Idaho, Illinois, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, New Mexico, New Jersey, Nevada, North Carolina, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Washington and Wisconsin.

The settlement money will go toward the investigation costs, attorney fees and a program to prosecute other fraud cases, said Ross in the California Attorney General’s office.

Seven other states and the District of Columbia were part of the agreement but will receive no money because they were not part of the original action. The states are Alabama, Montana, New Hampshire, Ohio, Oklahoma, South Dakota and Virginia.

Tahoe Daily Tribune E-mail: tribune@tahoe.com

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