Consumer Notes

By Sunenblick, Jesse | Consumers' Research Magazine, May 2000 | Go to article overview
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Consumer Notes


Sunenblick, Jesse, Consumers' Research Magazine


Sweepstakes Settlement

The sweepstakes company United States Purchasing Exchange (USPE) has agreed to pay more than $30 million to consumers for allegedly misleading them about their chances of winning prizes. The settlement, which was negotiated by the attorneys general of 48 states and the District of Columbia, is the largest of its kind, reports The Washington Post.

USPE, a privately owned California company, was accused of issuing mailings that deceived consumers into thinking they were close to winning a sweepstakes, and could increase their chances by purchasing other items (such as clothes, tools, and knicknacks) through a catalogue order. In actuality, no purchase was necessary to win a prize.

According to the Maryland Attorney General's office, the agreement requires USPE to make clear to consumers that purchasing from USPE will not increase their chances of winning a sweepstakes. Any consumer who spent more than $1,870 with USPE during the calendar years 1997, 1998, or 1999 is eligible for restitution.

The settlement also prevents future abuse of consumers by requiring that USPE stop mailing solicitations to consumers who have made more than 25 purchases or have spent more than $935 in any 12-month period.

The lawsuit is part of a larger governmental crackdown on the sweepstakes industry. Last year more than 30 states sued Publishers Clearing House, claiming deceptive sales tactics similar to those of USPE. Also last year, 40 states settled identical claims with American Family Publishers, which agreed to pay states $7 million for legal costs, and consumers $32 million in refunds.

Nursing Home Troubles

Due to a dramatic rise in medical malpractice lawsuits, nursing homes nationwide are having a tough time getting liability insurance. Many carriers across the country are either raising rates or simply refusing to write policies for nursing homes.

The St. Paul Companies, the nation's largest provider of medical malpractice coverage, has stopped writing nursing-home liability policies in 33 states, according to USA Today. With the demand for nursing-home care on the rise, advocates for the industry worry that a scarcity of insurance will force many homes to close.

Nowhere is the insurance scarcity problem more acute than in Florida, where fewer than three major carriers remain active, and where one large carrier, Caliber One, has recently cancelled existing policies for at least 29 homes, reports USA Today. With the number of malpractice suits on the rise, insurance carriers in Florida are packing their bags and cutting losses.

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