Surprise! You were a winner ... but not anymore
You're a winner? Don't wait. Take the money and run!
The legend was that you — yes, you! — might see a flashy van pull up to your door someday heralding the news that you were a winner in the Publishers Clearing House sweepstakes.
The giveaway promotion became a little, or maybe a big, piece of Americana, illustrating the actually rather flimsy belief that anyone — even you! — could become a millionaire by not doing much of anything other than subscribing to a few sketchy magazines. The craftier ones among us knew that under federal laws, they could even skip the magazines and just enter for free.
Factoid: The odds in a typical PCH drawing are about 1 in 1.3 billion
Ah, but merely entering didn’t do much for your chances of hitting it big, which were many millions to one. You could, of course, supposedly improve the odds by buying stuff. Each purchase bumped you a bit higher up the stairway to heavenly riches, PCH said, a claim that consumer protection officials in 32 states challenged a few years back, saying that buying more books, tapes, CDs, etc., from PCH did nothing to improve the odds. PCH settled that case for $3.5 million and promised to clean up its act.
The dream dies
So, like most sweepstakes, PCH was basically just one step up from a fairy tale. There were occasional big winners though — and they are some very unhappy campers these days.
It seems that the PCH we all knew and ridiculed is gone. Bankrupt, in fact. It sank into bankruptcy last spring and new owners, something called ARB Interactive, have taken over.
And guess what? ARB says it is not responsible for continuing payments to yesteryear’s big winners, most of whom opted to get a weekly or monthly check rather than one big fat check when they won the award. So, no more PCH, no more check. They’re not happy about it.
One of them is John Wyllie, 60, of Bellingham, Wash., who won $5,000 a week “for life” in 2012. For more than a decade, he collected an annual check for $260,000. The payments allowed him to retire and buy a six-acre property. But this January, the money dried up. But the “for life,” in this case, applies to PCH’s life, Wyllie’s
“I’m getting the shaft, on top of the shaft,” Wyllie said in a New York Times report. “Looking at [the giant check] makes me sad and it makes me mad.”
The problem is that when a company enters into bankruptcy, its lenders line up in order of security — meaning whether their loan is “secured” or not. A secured lender is one who is holding a mortgage on a building or a car loan, where there is a physical object that provides what we might call collateral.
Then there are “unsecured” loans — basically just an IOU. They’re last on the list of creditors to be paid.
Now, when the “old” PCH went broke, it listed liabilities of up to $100 million and somewhere between $1 million and $10 million in assets. That adds up to a lot of creditors fighting over a pretty small scrap of money and that’s bad news for the John Wyllies of the world.
A lesson learned
There’s a lesson to be learned here — not just the one about no free lunch. Simply put, it is: Get the money. Some financial advisors tell their clients it’s better to collect big awards and winnings over time to limit their tax liability. But as John Wyllie now knows, the drawback to that advice is that if the debtor goes broke, the money — well, it’s gone.
This kind of thing actually happens quite a lot. Many companies, especially those selling somewhat iffy products, are very thinly capitalized and are often little more than a source of spending money for their owners. When they slip away in the night, it’s the consumers who are left holding a worthless note.