Gateway hit with credit card lawsuit

Cow-fixated computer maker Gateway is on the receiving end of a nasty class action lawsuit claiming the firm misled customers.

The allegations involve a 'free' Internet access service for which some users were subjected to long distance phone charges and the issuing of credit cards with a stonking 27 per cent interest rate. The company is also accused of refusing to accept goods back from dissatisfied customers.

According to Electic Tech, heavyweight law firm Milberg Weiss is claiming that Gateway violated both the California Consumer Legal Remedies Act and the California statute prohibiting fraudulent and unfair business practices and false and misleading advertising.

The complaint also accuses Gateway of violating California laws covering fraud and deceit, negligent misrepresentation, and intentional infliction of emotional distress.

Gateway allegedly claimed that some of its product packages included free Internet access for the first year. The offer was deceptive and fraudulent, the complaint says, because Gateway did not reveal that thousands of people would be charged long-distance connection fees because the company did not provide local access numbers. Customers were therefore deprived of the free Internet access advertised by Gateway, and could have unwittingly paid long distance charges.

The complaint further alleges that Gateway defrauded a separate class of consumers by automatically enrolling people who expressed an interest in Gateway's Moola MasterCard plan, which carried an Annual Percentage Rate of 26.99% (this is apparently "competitive", according to the brochure). The interest rate, the complaint alleges, was revealed only after it was too late to return the goods for a refund.

According to Milberg Weiss, the lawsuit 'seeks to enjoin Gateway from continuing its allegedly deceptive practices and to cease collection activities against members of the classes.' The lawsuit also seeks disgorgement of Gateway's allegedly ill-gotten gains, and the award of compensation to class members for injuries suffered as a result of Gateway's alleged wrongdoing.

Gateway was unavailable for comment at press time. ®

Register Interestoid

When Barclays launched the UK's first credit card - the modestly-named Barclaycard - it almost immediately reduced its 'competitive' interest rate of 28 per cent to 24 per cent when a journalist pointed out that the Mafia only charged 25 per cent APR.

Related story

Half Gateway's profits come from software and services