Palm, FTC Reach Settlement On Marketing Claims

Under the terms of the settlement, the FTC said, the handheld computer company would be required to clearly disclose when consumers have to buy additional equipment, such as a modem, and to obtain advertised services like access to e-mail or the Internet.

In its complaint, the FTC said that Palm claimed that its handheld devices could access the Internet and run Microsoft Word and Excel programs, when in fact most models required separate modems or software to perform such functions.

In addition, the company did not disclose that users needed to subscribe to its proprietary Internet service at additional cost for wireless access, the FTC said.

Palm will be required to clearly explain that additional products are needed to perform such functions in the future, the FTC said, and explain that its wireless Internet service does not cover the entire United States.

A Palm spokeswoman said the company believed it had not misled customers in the past, but that it would comply with the terms of the settlement.

"We are happy to make disclosures in larger type or more explicit language, or both," said Palm spokeswoman Marlene Somsak.

The company will be liable for penalties of up to $11,000 per count if it violates the agreement.

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