Beginning in late December, sweepstakes mailings by Publishers Clearing House will include a reminder letter telling consumers that no purchase is necessary to participate in the sweepstakes, a form of lottery.
Illinois Attorney General Jim Ryan said the company would pay more than $18 million in the settlement, including restitution payments to the states, as well as costs and fees.
Publishers Clearing House, based in Port Washington, N.Y., and rival American Family Publishers have come under criticism for their methods of promoting the sweepstakes.
Some consumers spent thousands of dollars for magazines and other items in hopes of winning prizes. There were 35 lawsuits filed against Publishers Clearing House and investigations in other states.
Closely held Publishers Clearing House agreed in the settlement not to use personalized, simulated checks to represent prizes unless they are clearly marked that they are not actual checks. The company also agreed not to use misleading delivery methods suggesting that its mail is "high priority."
Publishers Clearing House contends that its mailings were clear and that it has awarded about $160 million in major prizes over the last 46 years.
The company said that it settled to avoid the costs of litigation in so many states and that it is working with the remaining states to reach a settlement.
The states participating in the settlement are Alabama, Arkansas, California, Georgia, Hawaii, Idaho, Illinois, Louisiana, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Utah, Virginia, Washington and Wyoming, as well as the District of Columbia.