Gateway fined for false ads

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The Federal Trade Commission said Gateway, N. Sioux City, S.D., agreed to pay $290,000 as part of a settlement over false ad claims. The FTC said Gateway made "numerous false statements" in advertising its refund policy and on-site warranty service. Ads, the FTC said, stated that Gateway would provide a "money-back guarantee" with "full refund" and free "on-site service." In fact, regulators said, Gateway deducted from refunds the cost of shipping PCs to consumers, an average $62, and would not provide the on-site service until Gateway diagnosed the problem over the phone and determined the consumer couldn't make the repair. In a proposed settlement, Gateway would have to make full refunds unless it fully discloses in ads any deductions it would make; and it couldn't promote free on-site service without disclosing limitations. The ads in question are by Gateway's in-house ad department.

Copyright July 1998, Crain Communications Inc.

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