$400-off ads for PCs draw FTC scrutiny

By Published on .

The expansion of $400 rebates for PCs is attracting the eye of the Federal Trade Commission.

What started as one marketer's attempt to offer a nearly free computer if consumers would sign up for three years of Internet service has blossomed into standard industry practice. And the FTC is worried that retailer ads listing the post-rebate prices don't give enough information.

"We are taking a broad look at it," said Lee Peeler, FTC's associate director for advertising practices. "The explosion in advertising [of rebates] for PCs is a concern for us. The question is whether [advertisers] are adequately disclosing terms and conditions."

The "look," which isn't yet a formal investigation, follows quick growth of the rebates. Within the past two months, Microsoft Corp., Prodigy and America Online's CompuServe service all began offering at various retailers the $400 rebate with a three-year Internet sign-up, a trend started by New Hampshire-based Empire.Net.

"The question is," he said, "do consumers understand and are they being taken advantage of?" He added that the advertising "has grown like wildfire."


Several state attorneys general also are eyeing the ads. A spokesman for New York's attorney general last week said that office is planning to distribute a tip sheet to consumers about rebates, and a Florida assistant attorney general said his office has received some complaints about the rebates.

A spokeswoman for CompuServe said last week that it has no issue with a possible FTC examination.

"It is a rebate offer. It is in our interest that consumers understand what the offer is," she said.

Copyright September 1999, Crain Communications Inc.

Most Popular
In this article: