Jessica Mendoza (2:20)

We're spending millions of dollars.

Prize Patrol Host (2:21)

I'm so excited to embark on this adventure with all of you. Made the best idea win on brand with Jimmy Fallon. Ton NBC.

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Jessica Mendoza (3:06)

Before it became known for its sweepstakes, Publishers Clearinghouse, or pch, got its start selling Magazine subscriptions.

Akiko Matsuda (3:16)

The company was founded on Long island in the 50s, and it's meant to be for the coupling of magazine publishers.

Jessica Mendoza (3:28)

That's our colleague Akiko Matsuda. She covers bankruptcy.

Akiko Matsuda (3:32)

They sell magazine subscriptions on behalf of publishers. That's why it's called Publishers Clearinghouse.

Jessica Mendoza (3:41)

In those early days, PCH would send out lists of magazines through the mail to homes across the country with the hope that recipients would subscribe and earn PCH a commission. Those mailers were a core part of PCH's business. They came in thick yellow envelopes. And by the 80s, the company was selling more than just magazine subscriptions. Things like jewelry, collectible coins, ceramic figurines, you name it, all through the mail. But there was a problem with those mailers. PCH sent out a lot of them, and for a lot of Americans, it was just junk mail. PCH became the butt of jokes on shows like Seinfeld because the mail never stops.

Prize Patrol Host (4:22)

It just keeps coming and coming and coming. There's never a let up. It's relentless. Every day it piles up more and more and more and you gotta get it out. But the more you get out, the more it keeps coming in. And then the barcode reader breaks and it publishes Clearinghouse death. All right, all right, all right.

Jessica Mendoza (4:39)

So how do you entice people to open their junk mail? The answer was sweepstakes.

Akiko Matsuda (4:45)

They included as a marketing tool to get people excited about going through those lists because they have the sweepstake application too. And some people may try to buy magazine, but at the same time, many people try to just apply for the sweepstakes.

Prize Patrol Host (5:03)

What's the new Publishers Clearinghouse sweepstakes doing.

Jessica Mendoza (5:05)

Over there cluttering my desks?

Prize Patrol Host (5:08)

Don't you know you could win $2 million? Stop making excuses. Enter the one and only Publishers Clearinghouse Sweepstakes.

Akiko Matsuda (5:15)

There's no place like our house.

Prize Patrol Host (5:18)

Come on, send it in. Send it in.

Jessica Mendoza (5:20)

The strategy worked. With prize money in play, more recipients responded to the mailers. And as more people responded, PCH would sell more magazines and merchandise. Eventually, PCH started featuring winners in its TV ads through what the company called the Prize Patrol. Those are the commercials where hosts travel the country giving out oversized checks to winners.

Prize Patrol Host (5:40)

The Publisher's Clearinghouse Prize Patrol kicks off the 21st century with $21 million. It'll all happen live on TV and FP.

Akiko Matsuda (5:50)

Many people who I talked to said that, you know, haven't you seen those commercial popping in during the football super bowl and kind of 10,001 million.

Jessica Mendoza (6:02)

Right, right. That's the Stuff that, like, I remember about sw, it's like, oh, my gosh, there's confetti. And then the giant, like, yeah, the giant check.

Akiko Matsuda (6:10)

Yeah. And you don't know what's going on, but it's a happy moment.

Jessica Mendoza (6:14)

What were some of the prizes? What was the range of what they would give away?

Akiko Matsuda (6:18)

5,000, 10,000, and can be 200,000. And the biggest one is $5,000 a week forever, quote unquote, meaning that the winner is going to get the prize for life. And after the winner passes away, it's gonna be passed along to somebody, designated person, until the person dies.

Jessica Mendoza (6:45)

Wow. Two lifetimes.

Akiko Matsuda (6:47)

Two lifetimes.

Jessica Mendoza (6:48)

PCH's forever prize was the biggest. The company gave out promising contestants a constant stream of checks for life.

Prize Patrol Host (6:56)

It's February 28th, and the prize patrol is in Cottage Grove, Oregon. And we're about to surprise tomorrow be.

Jessica Mendoza (7:02)

With $5,000 a week forever. Let's go do it, Howie.

Prize Patrol Host (7:05)

Let's go. We all pretty much all had just gotten up from bed, and so when the phone, the or when the doorbell started ringing, like, it was like, ding, ding, ding, ding, ding. You know, not just a one ding. And so we're all like, what on earth?

Jessica Mendoza (7:19)

That's Tamar veach. She won PCH's Forever Prize in early 2021. She lives in Oregon with her husband Matthew and their three kids.

Prize Patrol Host (7:28)

And so Matt goes to the door, and he looks out because we have a window to the left of our door. And he's like, honey, there's people with balloons and cameras.

Tamar Veach (7:38)

No, I said, honey, it's for you.

Prize Patrol Host (7:39)

Oh, well, that's what it was. I thought I had thought you said that. And so I was just like, wait, what?

Tamar Veach (7:45)

And you could see them, and they were standing out there with balloons and cameras and lights.

Prize Patrol Host (7:50)

First thing I said was, I look terrible. I just got up. Oh, my gosh. Why did they have to come now? So at first, I just went out there, and I brought my daughter with us. I was just. Oh, my goodness. Hi, we're looking for Tamar.

Jessica Mendoza (8:04)

Yes, come on out, Tamar. Do you know what's going on right now?

Prize Patrol Host (8:08)

Yeah, I do. I didn't think it would ever happen, though. Oh, today's the day. Today's a good one. You just won the Publisher's Clearinghouse sweepstakes.

Jessica Mendoza (8:17)

$5,000 a week, forever.

Prize Patrol Host (8:21)

I didn't think this would ever happen.

Jessica Mendoza (8:23)

Could you guys use the money?

Tamar Veach (8:24)

We do. Okay. But still. Oh, my goodness.

Prize Patrol Host (8:29)

This is truly real. Don't give up.

Jessica Mendoza (8:32)

How did you feel when you Found out, like when you looked out the window or maybe when you opened the door, like, how did it feel to know for sure that, shoot, you finally won after all that time?

Prize Patrol Host (8:42)

You know, I'm not like one of those people that, you know, jumps around and screams. That's just not me. So when I went out there, I was just kind of. I was just standing there, just kind of wide eyed, like, oh, my goodness, you know? Yeah, it happened.

Tamar Veach (8:55)

It was. For me, it was a huge relief.

Jessica Mendoza (9:00)

Tamar and Matthew met in the army in 2001 while they were stationed in Germany. They married soon after.

Tamar Veach (9:07)

The army doesn't care if you're dating or even if you're engaged. You have to be married. And so we both, on our own, we both kind of thought, oh, we have this sneaky idea, what if we.

Prize Patrol Host (9:17)

Got married and he actually was not supposed to be in Germany at all. He was supposed to have gone to Italy. And we joke because we're like, okay, well, he was obviously sent there to meet me because otherwise that was it.

Jessica Mendoza (9:29)

That was the mission. Both Tamar and Matthews served in the army during the Iraq war, and through their service, they developed disabilities that prevent them from working full time jobs. Tamar has chronic pain problems and Matthew has struggled with ptsd. Since leaving the army, they've depended on disability payments from the army to live. They say it's enough to get by, but money's still tight.

Tamar Veach (9:52)

I'm working on budgeting food to have good, healthy meals for our family, and we spend a chunk of change just on good food. We're not even eating extravagantly, but it's like every time, it's shocking to me. Food and clothes and children keep growing.

Jessica Mendoza (10:11)

Immediately after winning that lifetime prize, Tamar got a check for $50,000. PCH told them the rest of her winnings would come later. So what did you do with the money with the first, that first payment?

Tamar Veach (10:24)

We paid off debts, right?

Prize Patrol Host (10:25)

That was like the first thing we paid off debt.

Jessica Mendoza (10:27)

Yeah.

Tamar Veach (10:27)

And it's a talk about an immense relief to just zero every bit of debt you have. We had a minivan that was falling apart, and so we were able to get a new car that all of us could fit in. And that's nice, you know, I mean.

Prize Patrol Host (10:42)

It'S basically, you know, we took care of all of our needs, all the things that needed to happen, you know, fixing things around the house, you know, basically just everything that we needed.

Jessica Mendoza (10:53)

After that initial check, Tamar got her winnings in a lump sum. Every February after taxes, the total came out to about $200,000 a year. Did you feel certain that the checks would keep coming?

Tamar Veach (11:06)

Yeah, we asked Publishers Clearinghouse, the lady that we interfaced with and she said, oh, yeah, we have all these millions and millions of dollars to pay all the prizes. But it was this real reassurance that, yeah, yeah, that we'll be able to pay this. And we plan on paying, giving more of these away.

Jessica Mendoza (11:27)

But that forever prize didn't exactly last forever. That's.

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Jessica Mendoza (12:47)

Since winning PCH's Forever Prize, Tamar and Matthew have used their prize money in a number of ways. They bought a car, paid off their debt, and they've taken their children on vacations. Earlier this year, they were expecting their usual $200,000 deposit in February, and they'd started making plans for how they'd spend it.

Tamar Veach (13:05)

We had gotten four years of payments, which is a good chunk of money, and we spent a lot of it. We set some aside for it. We started to talk about saving for college fund for our kids. We did have a rainy day fund, but we had planned on kind of like, okay, we'd done some big trips, we're going to get paid this year. This is our plan for the money. We've got a couple big repairs we need to do on our house, but we're going to really start saving a lot of this money, right?

Jessica Mendoza (13:31)

But the payment didn't come. Something was up.

Tamar Veach (13:34)

Three weeks in we started. We emailed basically everyone at Publishers Clearinghouse we could and finally got a response from one of their lawyers and he was like, oh, we've changed the system. We're not going to pay you yearly. We're going to Pay you quarterly in July now, okay. And we're like, okay, well. And I sent emails back and forth of like, you're putting us at real hardship here. We plan for this.

Jessica Mendoza (13:59)

It turns out that for years PCH's business had been struggling. The company had been trying to transition its business online away from the mailers it had become known for. But PCH faced a lot more competition in the world of E commerce. Here's our colleague Akiko Matsuda again.

Akiko Matsuda (14:17)

So they kind of saw that those online businesses became very prevalent. If you go to Amazon, you can buy anything, everything.

Jessica Mendoza (14:25)

At the same time, PCH's costs were going up. Everything from the price of TV ads to its mailers.

Akiko Matsuda (14:32)

The cost of those shipping postages for sending direct mailing to customers also went up. So it's a combination of the things that they are trying to change into digital company magazines subscriptions are not selling anymore merchandise. They have to kind of stop selling those things because it's not selling, it's not making any money for the company. So many things didn't work out.

Jessica Mendoza (15:00)

But the biggest hit to PCH's business came in 2023. The Federal Trade Commission had accused PCH of misleading customers into thinking that buying merchandise from the company would better their chances of winning the sweepstakes.

Akiko Matsuda (15:14)

They somehow gave the impression that if you buy it by subscribe to magazine or if you buy these products, you're going to win prizes.

Jessica Mendoza (15:24)

What did PCH have to say about that? Were they like telling customers that if they bought stuff, they would have a better chance?

Akiko Matsuda (15:32)

They denied any accusation, but they decided to settle for 18 million. And they said that that was a very difficult amount of money for them to pay.

Jessica Mendoza (15:46)

That $18 million settlement was a huge blow to PCH's finances. And in April of this year, the company filed for bankruptcy. The day after the filing, winners like Tamar got an email from pch. It said that the company intended to keep sending the checks. Tamar and Matthew decided to wait for the promised July payment. But July came and went and no payments showed up in Tamar's account. When they asked the company, PCH referred them to the bankruptcy case. Tamar and Matthew would have to claim their winnings there. But Akiko says it's unlikely Tamar and Matthew will be paid from the bankruptcy because in the bankruptcy case, prize winners are not secured creditors. What is a secured creditor?

Akiko Matsuda (16:28)

So secured? Everybody knows, or maybe many people knows about how mortgages work. When you buy a house, you take out the mortgage. That's secured loan. That's because if you cannot make payments for mortgage loans, the bank will eventually come to your house and foreclose your property and they take it.

Jessica Mendoza (16:55)

In other words, the mortgage is backed up by an underlying asset, the house. In bankruptcy, the same principle applies. Secured creditors have assets they can claim back from the bankruptcy estate. But in the PCH bankruptcy prize winners like Tamar don't have an asset to back up their claims to their winnings. They just have a contract. But so what happens in that case?

Akiko Matsuda (17:16)

The bankruptcy empowers those filers to reject contracts. So this is very unfortunate but that's why if you are not secured creditors, secured meaning that they have some asset to back up those contracts or loans, this is just agreement between the two parties so that can be rejected. That's the whole point of bankruptcy, to give the filers a second chance so that they can get out of bankruptcy and thrive as a new revive business.

Jessica Mendoza (17:56)

This summer, PCH was bought out of bankruptcy by an online casino company called Arb interactive for over $7 million. ARB says it plans to keep doing PCH sweepstakes, but it isn't responsible for paying past winners. Arb says that it understands the concerns surrounding unpaid prizes owed to past winners. It added that it's taking steps to ensure that all future prizes are protected by regardless of the company's financial status. What are your options as of now?

Tamar Veach (18:29)

So right now for us we're in the pool of unsecured debt in the bankruptcy and probably we'll get pennies on the dollar. I've joked with friends that we're going to get a check for a couple hundred dollars and a handwritten note and that'll be it.

Jessica Mendoza (18:46)

Tamar and Matthew say that they'll be okay financially. They still get disability payments from the army to cover their expenses. Still, the loss of their prize is a huge blow to their family. They'd plan to use the prize money to pay for their kids college expenses. But Tamar and Matthew say that what upsets them the most was the way PCH treated them.

Prize Patrol Host (19:06)

It was the deception that made it the worst. Because it's like you guys kept telling us that yes, we're your priority, yes, we have the money to, to last for such and such. And so it was just kind of like, why would you lie? You should, you could have just told us to begin with and now you've made it worse. And not just for us, for all the other lifetime winners. Yeah, you know, I played this game by their rules and then it was like I won because I did this. I won. Because what you set out, I did. And it came back, you know, and so it was just kind of like. It's the trust. Yeah. And the deception is the hardest because it's like it didn't really need to happen that way.

Jessica Mendoza (19:58)

That's all for today. Tuesday, October 7th. The Journal is a co production of Spotify and the Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your. Podcasts were out every weekday afternoon. Thanks for listening. See you tomorrow.