I had always played with the bluffing rule. I never bluffed myself, though, because:
a) I have no poker (Scrabble?) face to speak of; I'm an even worse liar than Clark, and
b) If you are caught in a bluff, you forfeit your turn. (Of course, if you are challenged and your word is in the dictionary, the challenger has to forfeit their turn.)
So, in my understanding, Lois was not cheating with "chumpy," but she should have lost her turn when it was not in the dictionary. Or, if they didn't have a dictionary available, then she should have admitted to making up a word, taken back her tiles, and let Clark go again; but this is Lois we're talking about. That was never going to happen.
Joy,
Lynn
