RealTime IT News

Gateway 2000 to Pay $290,000 in False Advertising Case

Computer maker and Internet marketer Gateway 2000 (yes, the one with the cute cow packaging) has agreed to pay $290,000 as part of a false advertising settlement with the Federal Trade Commission.

According to the complaint detailing the charges, the FTC alleged that Gateway falsely advertised that it provides a "money back guarantee" of a "full refund," when, in fact, it deducted the cost of shipping the merchandise to consumers, an average cost of over $62, from the refund amount.

The company also told they would be provided free "on-site service" upon request, when, in fact, the on-site service was not provided until Gateway diagnosed the problem over the telephone and determined that the consumer could not make the repair.

Under the proposed settlement, Gateway would be prohibited from misrepresenting its money back guarantee policy and its on-site service provision.

In addition, the FTC alleged that, in its written warranties, Gateway falsely represented the remedies available to consumers seeking incidental or consequential damages, completely disclaiming such liability despite the fact that some states do not allow for such exclusions or limitations.

The complaint also alleges that Gateway's written warranty disclaimed all implied warranties, that Gateway failed to make the text of its written warranties readily available to prospective buyers prior to the sale, and that Gateway failed to include mandatory language concerning consumer's legal rights in its written warranties--all of which violate either federal warranty law or its rules.

In a consent agreement in which the company admitted no wrongdoing, the company said it would pay approximately $290,000 to the U.S. Treasury--the amount equal to the shipping charges that Gateway should have refunded to consumers.

Individual consumers who should have received a refund generally could not be identified, the FTC said.