FTC Slaps Palm

PDA maker Palm Inc. has reached a settlement with the Federal Trade Commission in a case involving Palm’s advertising claims regarding the wireless performance of its handhelds.

The FTC said that Palm had claimed in ads that its PDAs come with built-in wireless access to the Internet and email, as well as other common business functions — claims that the FTC alleged were not true for many models.

Under the terms of the settlement, Palm would have to disclose, clearly and conspicuously, when consumers have to buy add-ons in order to perform the advertised functions.

For most Palm PDAs, the FTC said, consumers must purchase and carry a separate wireless modem or a device to connect the PDA to certain mobile telephones, and in order to perform the claimed business functions (running Microsoft Word and Excel programs) using Palm PDAs, consumers must purchase and install additional software.

In addition, the FTC alleged that the company’s advertisements failed to disclose that purchasers of one model line that comes with built-in wireless Internet and email access must subscribe to Palm’s proprietary “Palm.Net” Internet service and pay monthly service charges.

Under the terms of a consent agreement, Palm would be prohibited from misrepresenting that its products can perform any business functions that they cannot perform without buying additional products or services. Palm had no immediate comment.

Last year, Palm competitor Microsoft Corp. settled with the FTC on charges of deceptive advertising surrounding its PocketPC print campaign. Microsoft’s problems also revolved around the need for the additional purchase of a wireless modem.