PDA market leader, Palm, announced that it had reached a settlement with the
US Federal Trade Commission, which had accused the company of hyping its
products with misleading advertising claims. In ads that ran in newspapers and
magazines Palm stated that its PDA come with built-in wireless access to the
Internet, e-mail and business programs.
Only in microscopically small print does the ad explain that in fact users
would have to purchase a separate modem, as well as software programs to perform
wireless business functions such as viewing spreadsheets and other documents.
The ads used type a third the size of average print for the disclaimer and
placed it on the side of the ad, sometimes with hard-to-read white text on a
light background or black text on a dark background. While there are no standard
for how large a disclosure should be, the information must be understandable to
the average consumer, the FTC said.
In the settlement, Palm has agreed to "clearly and conspicuously''
disclose when consumers have to buy additional products to perform functions
such as connecting to the Internet. Palm is also barred from making deceptive
statements about what its products do without extra accessories or services.
Palm spokeswoman Marlene Somsak said the company continues to believe that it
appropriately disclosed service or additional purchase requirements. "We're
happy to make those disclosures in larger type or more explicit language.''
The FTC has made similar allegations against Microsoft and Hewlett-Packard,
which made claims about built-in wireless Internet access for their Pocket PC
handheld computers. In its settlement with the FTC Microsoft agreed to write an
essay discussing the capabilities and limitations of the gadgets and publish it
as a quarter-page advertisement in newspapers across the United States.