Company's Crisis PR Includes Terse Response
When Publishers Clearing House, a business that has become as American as fast-food restaurants, came under scrutiny in Senate hearings last week, it decided not to take the assault on the chin. The company's response to widespread criticism was anything but the mea culpa crisis experts so often advise.
On March 8, the company's PR team issued a statement calling "inaccurate and incomplete" the evidence and testimony at the Senate Permanent Subcommittee on Investigations hearings on alleged sweepstakes abuses.
Yet another target, American Family Publishers, already settled more than $1 million in claims with more than 30 states on behalf of consumers who entered its sweepstakes, with indications that the regulatory push might be well-founded.
And the Better Business Bureau, according to reports obtained by PR NEWS, has received 953 complaints about PCH in the last 38 months. Nearly 300 of those claims were filed in the last 12 months.
Steadfastly asserting that questionable business practices are evenhanded, while charges of unethical behavior abound, is no kind of reputation safety net. While there is little the company can do to make the regulatory debate disappear, this is a sterling example of a company that needs to better protect its reputation by addressing the complaints, not burying them.
"In a crisis, it's incumbent on you not to get in the trap of using a blanket denial when the issue at hand may be factually correct," says Tony Greene, senior VP for account services for high-tech PR firm Sterling Hager Inc., Boston.
"If you do, you lose credibility. When the facts aren't in dispute, it's probably smart to say 'They have a point and this is what we're doing to fix it.' Forget the knee-jerk reaction."
"That's Our Story and We're Sticking to It"
The PCH response hasn't helped to combat congressional efforts to create new regulations to rein in companies that conduct sweepstakes.
While Sen. Susan Collins (R-Maine) proposes the first regulation of this industry, dubbed the "Honesty in Sweepstakes Act of 1999," PCH claims the hearings "painted a slanted picture that unfairly mischaracterizes our business."
The pending bill would force companies to provide clear instructions on how to enter a contest with or without buying anything and to post the odds of winning, among other provisions. Collins, who wouldn't speak with us directly, remains steadfast in her conviction.
And she's received backing from the American Association of Retired Persons, which provided statistics that Collins released at the hearings. AARP reports that 23 percent of seniors believe making a purchase increases their chances of winning.
No question: PCH's failure to offer up an apology is a risky move.
The company has kept a satisfactory rating with the Better Business Bureau. Yet the sweepstakes drama has provided ample fuel for the media, which has latched onto the controversy's most sensational angle: elderly American who have purchased thousands of dollars in magazine subscriptions and other products, thinking they were going to win a contest.
"We don't even know the ages of our customers," PCH responded in a press release last week. "Our product and magazine offers go to virtually every household in America. Senior citizens are knowledgeable and experienced consumers and we're proud to serve that market. [But] we are concerned about the small number of individuals who are unable to understand promotional materials."
However, it was almost business as usual at PCH's Port Washington, N.Y. headquarters last week, other than the absence of several key company execs attending the hearings: Director of Consumer Affairs Chris Irving, Senior VP of Creative Strategy and Communications Debbie Holland and general counsel Bill Low.
"You have several different options: you can be a victim or be in control," Greene says. "By being terse and reactive, you're ceding control to the situation. You're now a victim, not the author of your own story."
(BBB, 516/420-0500; PCH, 516/883-5432; Sterling Hager, 617/926-6665)