[Federal Register Volume 67, Number 49 (Wednesday, March 13, 2002)]
[Notices]
[Pages 11341-11343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5968]


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FEDERAL TRADE COMMISSION

[File No. 002 3332]


Palm, Inc.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment

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describes both the allegations in the draft complaint that accompanies 
the consent agreement and the terms of the consent order--embodied in 
the consent agreement--that would settle these allegations.

DATES: Comments must be received on or before April 5, 2002.

ADDRESSES: Comments filed in paper form should be directed to: FTC/
Office of the Secretary, Room 159-H, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. Comments filed in electronic form should be 
directed to: [email protected], as prescribed below.

FOR FURTHER INFORMATION CONTACT: Michael Ostheimer, Bureau of Consumer 
Protection, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-2699.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec. 2.34 of 
the Commission's rules of practice, 16 CFR 2.34, notice is hereby given 
that the above-captioned consent agreement containing a consent order 
to cease and desist, having been filed with and accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of thirty (30) days. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for March 6, 2002), on the World Wide Web, at http://www.ftc.gov/os/2002/03/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. Comments filed in paper form should 
be directed to: FTC/Office of the Secretary, Room 159-H, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. If a comment contains 
nonpublic information, it must be filed in paper form, and the first 
page of the document must be clearly labeled ``confidential.'' Comments 
that do not contain any nonpublic information may instead be filed in 
electronic form (in ASCII format, WordPerfect, or Microsoft Word) as 
part of or as an attachment to e-mail messages directed to the 
following e-mail box: [email protected]. Such comments will be 
considered by the Commission and will be available for inspection and 
copying at its principal office in accordance with Sec. 4.9(b)(6)(ii) 
of the Commission's rules of practice, 16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement containing a consent order from Palm, Inc. 
(``Palm'').
    The proposed consent order has been placed on the public record for 
thirty (30) days for receipt of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) days, the Commission will again review the 
agreement and the comments received, and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
order.
    This matter involves alleged misleading representations about Palm 
handheld computers or personal digital assistants (``PDAs''). This 
matter concerns allegedly false and deceptive advertising claims made 
in advertisements regarding the ability of Palm devices to wirelessly 
access the Internet and e-mail accounts and to perform other functions.
    According to the FTC complaint, Palm misrepresented that Palm PDAs, 
as sold, contain everything that consumers need to wirelessly access 
the Internet and their e-mail accounts. In fact, in order to wirelessly 
access the Internet and e-mail accounts using Palm PDAs, other than the 
Palm VII model line, consumers must purchase and carry a separate 
wireless modem or a device to connect the Palm to certain mobile 
telephones; and, moreover, many mobile telephones currently in use in 
the U.S. are not compatible with Palm PDAs. The complaint also alleges 
that in representing that consumers can use Palm PDAs, as sold, to 
access the Internet and their e-mail accounts wirelessly, Palm failed 
to disclose or failed to disclose adequately that in order to 
wirelessly access the Internet and their e-mail accounts, consumers 
must purchase and carry a separate wireless modem or a device to 
connect the Palm to certain mobile telephones. The complaint alleges 
that the failure to disclose this material fact is a deceptive 
practice.
    The proposed complaint also challenges as false the claim that Palm 
PDAs, as sold, can perform common business functions such as data base 
management, custom form creation, and viewing Microsoft Word and Excel 
documents. To perform these functions using Palm PDAs, consumers must 
purchase and install additional software. The complaint also alleges 
that in representing that consumers can use Palm PDAs, as sold, to 
perform these functions, respondent failed to disclose or failed to 
disclose adequately that in order to perform these functions using Palm 
PDAs, consumers must purchase and install additional software. The 
complaint alleges that the failure to disclose this material fact is a 
deceptive practice.
    Finally, the complaint alleges that in representing that consumers 
can use the Palm VII model line to access the Internet and their e-mail 
accounts wirelessly, Palm failed to disclose or failed to disclose 
adequately that consumers must subscribe to Palm.Net, a proprietary 
for-fee service. The complaint alleges that the failure to disclose 
this material fact is a deceptive practice.
    The proposed consent order contains provisions designed to prevent 
Palm from engaging in similar acts and practices in the future.
    Part I of the proposed order prohibits respondent from making 
misrepresentations that any PDA or handheld Internet or e-mail access 
device can perform any common business function that it cannot perform 
without additional products or services that consumers must purchase. 
Part I also prohibits misrepresentations that wireless Internet or e-
mail service coverage for the product is available everywhere or almost 
everywhere in the U.S.
    Part II of the proposed order prohibits misrepresentations about 
performance characteristics relating to Internet or e-mail account 
access of any non-wireless PDA or handheld Internet or e-mail access 
device (i.e., one that requires the use of an additional device in 
order to access the Internet or e-mail accounts wirelessly).
    Part III requires that when respondent makes any claims about the 
ability of any PDA or handheld Internet or e-mail access device to 
perform any function that requires the purchase of additional products 
or services, it must make a clear and conspicuous disclosure, depending 
upon the function being discussed. When the function involves accessing 
the Internet or e-mail accounts, respondent must disclose any other 
products (such as a modem, mobile telephone, or adapter) or Internet or 
e-mail access services (other than general-purpose ISP service, as 
defined in the order), that consumers must purchase in order to access 
the Internet or e-mail accounts. When the function does not involve 
accessing the Internet or e-mail accounts, respondent must disclose 
that additional products must

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be purchased in order to perform such function(s).
    Part IV of the proposed order provides that, for up to 120 days 
after service of the order, respondent may continue to ship products 
from existing stock in packaging with nonconforming labeling, as long 
as the packaging was printed less than 30 days after the date 
respondent signed the consent agreement.
    Parts VI through IX require Palm to keep copies of relevant 
advertisements and materials substantiating claims made in the 
advertisements, to provide copies of the order to certain of its 
personnel, to notify the Commission of changes in corporate structure, 
and to file compliance reports with the Commission. Part X provides 
that the order will terminate after twenty (20) years under certain 
circumstances.
    The purpose of this analysis is to facilitate public comment on the 
proposed order, and it is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 02-5968 Filed 3-12-02; 8:45 am]
BILLING CODE 6750-01-P