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FTC puts the kibosh on Palm Net ads

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ComputerWire: IT Industry Intelligence

Palm Inc has admitted that it misled US customers over the internet and enterprise capabilities of some of its handheld computers. The US Federal Trade Commission has ordered Palm to change future marketing materials to make clear that several of its models require add-on hardware to access internet and email services, and that its own internet service is only available at additional expense.

The Santa Clara, California-based PDA leader is now liable for penalties of up to $11,000 on each count if it violates the agreement, according to Reuters.

The FTC judged that a number of Palm's US advertising campaigns had given the impression that its m100, Palm III and Palm V models - all relatively old designs - were able to access these services "out of the box". In fact, they all require users to buy either a separate wireless modem or an adapter to connect the device to a modem-equipped mobile phone.

The FTC also ruled that Palm had not made explicit in its publicity that access to its Palm.Net ISP was a subscription-based service that would incur additional charges. Palm is also barred from suggesting that the service is available "almost everywhere" in the US, as many mobile phones in the country are not compatible with Palm PDAs.

Palm is not the first company to make this mistake. Microsoft Corp and Hewlett-Packard Co fell foul of a similar FTC ruling last year after claiming in a joint advertisement in national titles including The New York Times and The Wall Street Journal that HP's Pocket PC-powered Jornada could access the internet as bought, when it also required an extra modem.

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