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FTC slaps record fine on Iomega

Storage supremo pays $900,000 for failing to honor customer rebates quickly enough

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The US Federal Trade Commission has slapped a record-breaking $900,000 fine on Iomega, the Great Satan of Zips, for failing to pay cash rebates to customers quickly enough. The case goes back to a 1996 offer made by Iomega to entice users to buy Zip drives with a 'buy now, register your drive and get some cash back later' deal. Unfortunately, 'later' proved rather longer than most buyers had anticipated from the offer details -- some customers claimed they had waited up to four months for their money. The delays, which Iomega has since said were attributable to the "overwhelming response" to both product and rebates, contravened the FTC's Mail Order rules, which state a company must deliver rebates within 30 days. However, the FTC ruled that Iomega had not sought to defraud its customers -- it simply "got in over its head", said FTC staff attorney Matthew Gold. The $900,000 fine comes in over $100,000 more than the FTC charged Dell in April for violating mail order adverising regulations. See also Iomega sued over Zip-zapping 'click of death'

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