FTC cracks down on rebate offers

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The Federal Trade Commission sent a strong message last week that retailers, but not necessarily marketers, will be held accountable for delivering the goods on rebate offers.

The FTC focused its attention on three retailers -- Buy.com, Office Depot and Value America -- that commonly advertise computers with $400 rebates, provided consumers sign up for three years of Internet service. The commission said ads that fail to prominently make clear all rebate terms are misleading.

In the Value America case, the agency warned against retailers and marketers who fail to get rebates in consumers' hands within a "reasonable" time, unless that delay is explained up front. The FTC accused Value America of violating consumer protection laws by not disclosing that an advertised $400 Prodigy rebate wouldn't arrive for 12 to 17 weeks.

All three retailers agreed to settle charges stemming from the ads, which were created in-house.


Officials said the agency is looking at other cases -- the FTC is said to be examining America Online-owned CompuServe's rebates.

"We hope it sends a message," said Lee Peeler, associate director of advertising practices. "We are seeing a puzzling increase in ads where pertinent information is put in footnotes."

Joel Winston, assistant director of advertising practices, said while marketers sometimes provide rebates, retailers become legally responsible when they advertise them.

"As a matter of law, the retailers that ran the ads and sold the products, they are primarily responsible for the deception," he said.

The three cases offered slightly different factual situations, but all accused retailers of failing to disclose terms.

Office Depot was accused of hiding important details in fine print. According to the FTC, ads featuring a computer and monitor accompanied by the headline "Free computer after rebates" deceptively suggested consumers could get a computer and a monitor for free.

Buy.com was accused of advertising a computer for $269 in an ad that did not prominently spell out the requirement that consumers sign up for three years of CompuServe service. The company was also accused of not telling consumers that CompuServe access could require telephone surcharges.


Value America was accused of failing to prominently list important terms of its offer and of failing to return money to consumers whose orders couldn't be delivered in 30 days.

All three companies said their advertising has been changed.

Value America said it began clarifying its ads in March. "It is our responsibility to make sure that the advertising is clear and conspicuous for the customer," said Tyler Andrew, corporate communications director for the company.

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