A FORMER insider at the iconic sweepstakes company has revealed why its 72-year-old legacy culminated in bankruptcy in April, plus the dodgy switch-up that sparked a scandal regarding prior winners, leaving him “shocked and angered.”
The former Publishers Clearing House employee of 30 years shared the “cardinal sin” that ultimately damaged not only the company’s reputation, but also left previous sweepstakes winners extremely vulnerable.
Founded in 1953, Publishers Clearing House started as a direct-mail magazine subscription service and grew into a legendary sweepstakes company[/caption]
Publishers Clearing House would hand out prizes to unsuspecting winners, sometimes making them overnight millionaires[/caption]
The U.S. Sun exclusively spoke with Darrell Lester, a former senior executive at Publishers Clearing House, on the company’s downfall[/caption]
Publishers Clearing House, or PCH, has been a significant American cultural icon since its founding in 1953, with the legendary sweepstakes company representing the dream of instant wealth and the hope for a life-changing windfall.
Darrell Lester, a former senior executive at PCH and author of Downfall of an Icon, The Inside Story of Publishers Clearing House, told The U.S. Sun that winners are now being stripped of their prizes due to a regulatory change that took effect sometime after he retired in 2003.
PCH used to protect prize winners who chose installments by buying a prepaid annuity from a bank or insurance company under the winners’ names, guaranteeing the payments even if the company later went under, he said.
After Lester left the company, he was “shocked and angered” when he found out that PCH stopped using these prepaid annuities and instead paid winners out of its own revenues, leaving winners at risk now that it went bankrupt.
“That makes me very, very angry – not at the company, but at the person who changed the payout process. They probably recognized that the company might not make it and they could save some money perhaps,” said the former senior executive, saying that it may “ruin PCH’s reputation forever.”
He said that the switch-up, which he called a “cardinal sin,” was not only damaging to the iconic company’s reputation, but also to the previous sweepstakes winners.
PCH in a nutshell
Publishers Clearing House, or PCH, is a US-based direct marketing company best known for its sweepstakes and surprise “Prize Patrol” visits.
It was founded in 1953 by the Mertz family as a magazine-subscription clearinghouse, using sweepstakes mailings to boost sales and later expanding into merchandise and digital games.
While PCH became a household name through its massive giveaways, the company has also faced lawsuits and regulatory scrutiny over claims of deceptive marketing practices.
In April this year, PCH filed for bankruptcy, leaving many past winners without their promised “lifetime” payouts.
“It’s devastating to the winners. The worst thing in the world Publishers Clearing House could do is not pay their past winners,” said Lester. “You can’t do that as a sweepstakes company. That’s like going to a bank and putting your money in a CD and finding out the CD is worthless.”
With PCH’s legacy based on making people overnight millionaires in a highly public manner, Lester said that PCH had more favorable publicity than any other company in history, admitting that it was a shame that that has potentially all changed due to the payout scandal.
DREAMS BANKRUPT
The magazine subscription company rolled out its famous sweepstakes in 1967, handing out prizes such as $10 million or $5,000 a week for life, and smaller payments ranging from $2,500 to $3 million.
Employees tasked with handing out the prizes, dubbed the Prize Patrol, would film themselves delivering these large checks to surprise winners at their homes.
However, the 72-year-old company filed for Chapter 11 bankruptcy protection in April, citing roughly $40 million in debt and just $490,000 in assets thanks to rising operational costs and changes in consumer habits.
As a result of the bankruptcy filing, many previous winners in the PCH sweepstakes who had chosen annual “forever prize” payouts abruptly stopped receiving their promised lifetime cash, with 10 prize winners listed among PCH’s largest unsecured creditors on court records.
Tamar and Matthew Veatch, for example, both disabled Army veterans, were caught off guard when checks for their $5,000 a week for life prize stopped coming in.
John Wyllie, another winner of the coveted “forever” prize, similarly called it a “nightmare” when the money suddenly stopped, leaving him scrambling to find work, even fearing he would lose his home.
Timeline of trouble
- 1953 – PCH founded as a magazine-subscription service
- 1967 – Sweepstakes introduced to drive sales
- 1999 – Settled deceptive-marketing lawsuits with several US states
- 2020s – Transitioned heavily to online sweepstakes and games
- 2025 – Filed for Chapter 11 bankruptcy, halting payments to past winners
“Why didn’t somebody give me a heads up? ‘Hey, we’re going out of business.’ It’s not a good way to treat anyone,” Wyllie told NBC affiliate KGW.
TROUBLE BREWING
Lester started at the company in 1973 when he was just 21 as an entry-level marketing analyst, working there for 30 years and getting to know the seven original vice presidents personally, who became his mentors and his friends over his tenure.
Lester said he had many positive memories of PCH, including that when he joined the company, the founders mandated that every employee would get fresh cut flowers on Mondays – a tradition that held even when the company grew to 1,000 employees.
He also was proud of the fact that the “integrity-driven” founders, the Mertz family, quietly gave nearly $1 billion to charity, and that the original seven “wildly mischievous” founders brought a sense of fun and lightheartedness to the workplace, with one executive even giving a speech in his underwear.
It’s devastating to the winners. The worst thing in the world Publishers Clearing House could do is not pay their past winners. You can’t do that as a sweepstakes company. That’s like going to a bank and putting your money in a CD and finding out the CD is worthless.”
Darrell Lester
Lester described his career at PCH as a “rollercoaster ride,” with 25 years of “incredible fun on the ride up” thanks to the camaraderie and company’s exponential sales, but a “sharp downturn” during his last five years there.
He said that the company’s results collapsed essentially overnight, with sales dropping by 50% due to a scandal back in 1998 regarding allegedly deceptive sweepstakes marketing practices that decimated PCH and the broader industry.
For years, the company was hit with accusations that it misled consumers into believing that purchasing merchandise or magazine subscriptions would increase their chances of winning the sweepstakes, resulting in numerous lawsuits and settlements, although PCH consistently denied wrongdoing.
PCH ultimately pulled through as the last surviving direct mail sweepstakes company at the time, said Lester, surviving the scandal as well as public and legislative scrutiny around the same time regarding the addictive nature of the company’s sweepstakes promotions.
DREAM DEFERRED
Following PCH’s second wave of scrutiny in the wake of its payout structure change and bankruptcy filing, it was acquired by digital gaming company ARB Interactive in July for $7.1 million.
Although the bankruptcy court ordered the company to continue paying winners during the restructuring, ARB Interactive is only required to honor prizes awarded after July 15.
“We understand the concerns surrounding unpaid prizes owed to past winners,” a company spokesperson told The U.S. Sun, noting that ARB is taking steps to ensure future prize winners receive their cash regardless of the company’s financial standing.
They shared that ARB’s vision is to rebuild PCH as a brand synonymous with trust, excitement, and long-term integrity.
Looking ahead, we are planning to implement a robust, paying structure that stands separate from ARB to ensure that all future PCH prizes are honored, regardless of ARB’s financial status.”
ARB Interactive Spokesperson
While PCH’s switch to funding prizes via its revenue in the past ultimately sparked the controversy, ARB appears to be undoing that.
“They have told me personally that they are going to guarantee future prizes and have a process in place to do that. How that process works, I have no idea. It’s probably by doing what PCH used to do,” said Lester, referring to the prepaid annuities.
“I have told them I will be watching them,” added the former senior executive, who shared that he still has positive feelings about PCH as well as his colleagues from his days working there.
When asked if he believes PCH will survive, Lester simply responded, “I hope so.”
PCH is not the only company that has gone under recently.
A popular bowling chain, for example, filed for bankruptcy and abruptly shut down restaurants despite opening a new location just last year.
Meanwhile, a beloved furniture chain confirmed that 29 spots were on the chopping block after its bankruptcy filing – see if your store is at risk.
Publishers Clearing House has handed out hundreds of millions of dollars over the years[/caption]
In a famous incident, Johnny Carson presented David Letterman with a check from Publishers Clearing House as a joke[/caption]
Darrell Lester started working at Publishers Clearing House when he was just 21[/caption]
Publishers Clearing House’s famous Prize Patrol would surprise unsuspecting winners at their homes[/caption]
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