'Low-Cost' PC Dealers Chastised

SAN MATEO (06/29/2000) - Officials at the U.S. Federal Trade Commission on Thursday hammered some mega-e-retailers for deceptive online ads pushing cheap PCs.

Named in the FTC lawsuit, which was settled by the e-retailers, were Buy.com Inc., in Aliso Viejo, California, Office Depot Inc., in Delray Beach, Florida, and Value America Inc., in Charlottesville, Virginia.

Jodie Bernstein, director of the FTC's Bureau of Consumer Protection, said the trio engaged in "deceptive" advertising practices.

"You shouldn't need a Ph.D. to figure out the cost of a PC," Bernstein said.

At issue were confusing rebates for inexpensive or "free" PCs predicated on the purchase of lengthy Internet service agreements with ISPs.

Washington-based FTC issued orders to prohibit further "misrepresentation" of those vendors' PC costs. Also, the agency has mandated that vendors disclose the full price including the cost of attached products or services.

Finally, FTC's consent agreements require the vendors to tell consumers in the process of purchasing a low-cost PC what it costs to cancel the Internet service that they agree to. Those vendors also must disclose the fact that there are often long-distance calls tacked on for use of an Internet service.

To comply with the FTC's consent agreements, the vendors are not necessarily admitting violation of any laws. However, the FTC could lob an $11,000 penalty on any company that fails to comply with a consent agreement.

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