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.