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FTC Gets Angry Over "Free" PC Offers
Wister285 writes: "The Federal Trade Commission is going after buy.com, Value America, and Office Depot for running 'misleading' free PC offers. The FTC is claiming that the advertisements don't disclose the true restrictions and costs of the PCs, which can be up to $1000. When will people learn that Big Brother is always watching? Catch the story over at ZDNet." This goes way beyond "monitor not included," too.
Everytime you buy one of these "free pc's" you have to sign a contract. I don't know about some people, but when I sign a contract I read it. Anything that is not stated in the contract cannot apply to the deal being made. Unfortunately people sign things without reading them. They forget that they are bound to do with these contracts say. They get screwed by extra charges, they get pissed. Sorry but I think that's their problem.
Maybe I'm just being an elitist pig again `;^)
I was clearly thinking about the people who post links to grammer.com on slashdot, like me. If you tried to extract any meaning from the post, you overestimated me. Duh.
By "clearly thinking" I don't mean to imply I was thinking clearly. I must not be, because consumers of stupidity doesn't make sense, but then, neither does falling all over myself. I'm going to go try that now, it sounds like fun, and it counts on my quota of three impossible things I always do before breakfast (and I'm getting pretty damned hungry -- it's past midnight here, and so far I've only figured out what women really want and squeezed the toothpaste back into the tube once I was done with it).
You're only saying the opposite of what you mean...
Don't worry, they couldn't care less.
-fb Everything not expressly forbidden is now mandatory.
I find it unethical as well. But those are my ethics.
I vote with my money, though..
When an advertisement seems insulting or misleading, I try my very best to a) let the company know and b) not spend any money there.
And fine-print doesn't always matter when it comes to matters of perception.
Its good to read the contracts... but since...
IANAL, I guess I'll have to pay one to be on call 24/7
It isn't too difficult to buffer my statement, either. I can point to a couple immediate things, such as the number of times people drop $17 to buy a formulae pop CD from N'Sync or Brittney Spears or the number of idiots who really thought that if they flew to the Publisher's Clearing House headquarters, they were going to become multi-millionaires, because Ed McMahon had said they might have already won on the envelope they receieved in the mail. Then there are the thousands of idiots who fall prey to telephone scams. They willingly hand out $10,000, $20,000 -- even $100,000 with the promise of securing a million-dollar lottery that you've already won!.
What's funnier is that, in the last scenerio, these people usually end up falling for the same scam a second or even a third time! We hear them on 20/20 and 60 Minutes blabbering their sob stories to half of the televised world, expecting us to sympathize with their gullability.
So, while I think this is stupid that the FTC should have to step in considering how rediculous it is to actually expect that the PC's were without attached strings (who cares what the advertisements failed to mention, you don't need more than a handful of IQ points to figure this stuff out), it is nonetheless their duty to look for obvious exploitation of consumers. And, in this case, I think it's safe to assume that stepping in to defend the lowest common denomonator may have been appropriate.
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seumas.com
"Son, there ain't nuthin' in this world for free. You pay for it one way or the other." - some guy I met at a Pink Floyd show in '89 while looking for...well, nevermind.
Illegal yes, unethical no. Now you can just about say or write anything misleading as long as you have that really fast talking guy do all the legal exceptions and disclaimers at the bottom. In print it's that fine print you need a microscope to read.
More race stuff in one place,
than any one place on the net.
Shine on, you crazy diamond.
What they forgot to tell you that the T1 connection isn't included??
kick some CAD
A lot of posters have been angrily pointing out that - in various ways - if the good lord had not intended consumers shorn, he would not have created them sheep.
While there is some truth in that, it's worth bearing in mind that dishonest marketing enables an unscrupulous trader to take market share from the decent and honest merchants that people of discernment, distinction and intelligence (such as are to be found posting here) would prefer to deal with.
Losing market share yet not wanting to sell at a loss, those decent and honest merchants must needs raise their prices in proportion to their loss of economies of scale.
Hence, what the FTC is doing is protecting you, the smart consumer, from the financial and market consequences of the stupidity of the herd.
As such, their action is to be applauded.
-- AndrewD
A Maze of Twisty Little Laws, All Different.
It took them this long to go after them?
C'mon. These companies are selling a service, not hardware. If the buyer didn't figure this out when they signed on the dotted line, then it sucks to be them.
Feed The Need[goatse.cx]
Is that free PC as in free beer or free... oh nevermind, I never understood all this beer talk anyway. and I'm thirsty :-(
sig:
See the "..for smart people" banners Wired runs here? Look elsewhere guys.
Details about restrictions were either missing from the ads or printed in miniscule type.
Lack of Details? Miniscule Type? Anyone who has ever watched any TV commercial is used to these sins. ...credit cards, automobiles, cigarettes, alcohol, weight loss programs, just about every product or service that can be sold... vast amounts of advertising lies hide behind indecipherably-sized "qualifications" of the adverted claims, qualifications which often amount to "What we just said was true iff you ignore all of these ugly details" or "The results we just claimed occur only in exceedingly rare cases." We are merely seeing examples of such qualification in the other objectionable parts of the "Free PC" ads cited by the FTC.
I'm not saying that the FTC's accusations are wrong. What is wrong is that when the FTC picks on only certain companies or ad campaigns. The FTC should either address the greater problem of almost universal deception in advertising, or abandon the issue altogether.
If you're not wasted, the day is.
I wonder what the home shopping networks are going to do about this. Granted, their computers seem typically better and they do a better job at disclosing more (a lot more) information, but they do it much more crypticly.
They'll say over and over again, "Only...nine...hundred...dollars...NINE HUNDRED DOLLARS! We've never had a deal like this!" and that's what the large bold price in the lower left says. But that price is after rebates, and they don't mention that you have to send in the rebates half as often as they mention how $900 is an incredible deal. Also, on some of the channels, they only show the true price once every few minutes, which I feel is straight out fraud.
I also feel that the AOL deals you have to sign up for are not as well explained as they should be. They quietly hide the fact that in addition to the $1200 you have to pay for the $900 computer, you have to sign up for $720 worth of AOL. Even though you'll need Internet access anyway, and the "overall" deal isn't too bad, it requires you to put over $2100 up front.
Anyway, I'm glad someone's stepping in for the consumer. Most people interested in these deals are rather ignorant and rely on the salespeople to steer them right. These salespeople are, in turn, rattling off terms like "700 megahertz Athlon processor" knowing the consumer has no idea what it means. Then they tell the weary consumer how cheap it is, and the consumer signs up, not caring anymore. They just want a computer and to know how much it costs.
Anyway, what the FTC said was 'be more up front with your advertising'. No one had their children spying on them or their face stuffed in a cage with hungry rats. The point is that you can rip people off all you want - as long as you do it openly. It's the lying the FTC is trying to stop.
Plus, I think it's easy for us technical people to forget that for most people computers and the internet are mysterious, frustrating and frightening. Little do they realize they're supposed to be frustrating and annoying.
If that's what your eyes see, maybe you should consider having them upgraded. In fact, the government in the Gilded Age was constantly meddling in the economy, on the side of big business (e.g. strikebreaking either directly or by turning a selective blind eye to crimes committed by the Pinkerton gang). Not a free market by any reasonable definition.
But everybody ended up getting screwed except for either the really smart, clever, ruthless people, the really rich people, or the really rich, smart, clever, and ruthless people.
More accurately, the politically connected were able to screw everybody else, which is what happens when the extent of government exceeds a certain critical threshold.
To drag the thread back onto the topic, the fundamental issue here is the definition of "fraud". There is a vast mushy grey area between putting one's best foot forward and outright lying. It is a legitimate function of government to draw some sort of line in the grey area and enforce it. The main concern I see with the FTC action is that it seems to be trying to do the former (a legislative prerogative) when its mandate is limited to the latter.
/.
/. If the government wants us to respect the law, it should set a better example.
Unless she barbeques them first...
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Or 3) the FTC goes after lots of people all the time for similar reasons when they step over a line, and this is being reported on because its trendy.
Or 4) The FTC works on a basis of consumer/Better Buniness Bureau complaints and these companies have been having a lot of upset [would be] customers who are complaining.
OR 5) The issues they cited were considered bad by degree, and they determined that these companies were violating them to a degree more action worthy than others.
!OR! 6) They are planning to go after these issues in a more generalized way and are starting with an easy to understand target that a lot of people complain about and has extreme versions of the problems so that they can be sure it will all hold water before spreading out the enforcement.
Or maybe some /.ers just have to bash govenment one way or another. The FTC does its job and the anti-govs who don't call them fascists complain that they didn't try to sweep the entire ad industry this week. And a big brother comment in the main post, no less. Can we try to be a little less paranoid around here?
-Kahuna Burger
...will work for Chick tracts...
Never underestimate the power of human stupidity -RAH
Let's see... 36 months of MSN at $22/month comes out to just about $800, a return of -200%!!
And to think, I was going to trust this guy to manage my portfolio! I should have turned around and ran the other way when he informed me that 70% of the 600 million (!!) people living in the U.S. do not currently own a computer...
What, do they give degrees out at candy stores now?
heidi
This kind of thing is exactly why I don't understand the positions of Libertarians...
As a Libertarian, I will attempt to explain my position.
(apologies to Eric Raymond, of course). There are obviously people and--more often--corporations who purposefully deceive consumers to the fullest extent possible for the sake of making a big fat profit. That's why we have things like fraud laws and agencies like the FTC to enforce them.
The protection of the people against initiation of force and fraud are about the only things Libertarians DO believe is the role of government. Libertarians absolutely oppose the use of fraud.
It isn't easy for average Americans (bless their dim li'l hearts) to see through these kinds of offers, and it's great to see people who know what they're doing trying to protect them. Kudos to the FTC.
Here is where we actually depart ways. I do not believe the average American is an idiot. I believe people should be free. With that freedom, comes responsibility. A society that protects its citizens from responsibility is not a free society. Would you really want to live in an "idiot proof" society? Are you willing to give up your rights as an adult in order to have the government raise you children for you? Are you willing to give up a free market in order to avoid having to read the fine print?
When will Windows be ready for the desktop?
You're just entering college, and don't have that much money. . . . You figure that you'll pretty much need 56K internet access for a couple years any way
Any college student that figures as such is, frankly, an idiot. For about $30-50 paid at one time, that student can get access to their school's LAN with a desktop PC. A free Internet access provider provides service for those times when the computer is at home (i.e. now). There is no reason to have a traditional dial-up service while at college, unless you move off campus -- always an option.
BTW, I did know a few people (humanities majors, mostly) who still did keep and chiefly use their AOL accounts while at college. Fortunately, most of them chose to connect via TCP/IP instead of dialing in.
For more information, click here.
My parents are lawyers, and they frequently get people coming in to their office, asking to help them get their money back from some contract that had a lot of fine details. They didn't always read the contract, and even when they did, they often didn't understand it. In some of these cases it was just sheer stupidity on their part, but when a company tells you that you can get a free computer, and it's not free, that's deceptive advertising. It doesn't matter what you actually pay for, if it's required to get the deal, then it's not really free. Sure, people ought to be more aware of TANSTAAFL, but the average person is goes dumb as a fencepost when you tell them they can get a very expensive and desirable thing for free if they just sign on the dotted line. The government shouldn't protect people from all forms of stupidity, but it should take some reasonable measures when feasible, and this is one of those cases.
WARNING: there is a trojan on your
I think it is also misleading to advertise prices with the rebate amount already subtracted. Rebates and coupons are always "invalid when combined with other offers," so their real value is always less than their claimed value. A $300 rebate on computer equipment for opening an E*Trade account isn't really worth $300 when anyone can get a $75 cash rebate for opening an account with no further purchase requirement. A $400 rebate for committing to an ISP for three years isn't worth $400 if you're committed to paying more per month than other users of that ISP.
Is there any computer advertising that is not misleading? True monitor sizes are always "viewable area" fine print -- has that carried over to flat screens yet? Printer pages per minute figures practically assume blank pages. 56K modems don't run faster than 53K. Disk drive manufacturers have decided that a gigabyte is 10^9 bytes, not 2^30 bytes (a 7% difference; when we start talking about terabytes it will be a 10% difference).
I am a layyer, but this isn't legal advice. See an attorney licensed in your jurisdiciton if you need legal advice. Send me a better keyboard if you're having trouble reading my typing :)
Even in my office, I had trouble getting people to read the document. Yes, I was their lawyer, and no, I wasn't tryring to trick them. But, damnit, when someone's signing under penalty of perjury that they've read the document before signing, I expect them to read it -- *especially* when I'm notarizing their oath.
Nonetheless, again and again, people tried to just sign it, and were surprised that I wouldn't let them hand it back to me without actually reading it . . .
I had this problem even though I was conscientious about it. For a clerk who just has to initial it it will be a lot worse.. . .
There's also the problem of an "adhesion contract." If you hand someone the contract and tell them what it says rather than making them read it, the contract is on the terms you tell them, not the written contract. A few car rental companies have been burned badly this way.
hawk, esq.
Pizza Hut was forced to withdraw an ad that said it had more cheese than Pizza Haven pizzas. The FTC equivalent down here (the name escapes me) did some measurements on the two pizzas and told Pizza Hut that were false advertising as the amount of cheese was not significantly different to that on Pizza Haven's pizzas.
Vivek Mittal
Research Technologist
Telstra Research Labs
Maybe I shouldn't have named libertarians, anarchists, or anyone--just "those who thing the FTC was wrong to do this." Free-marketers would probably be the most accurate description.
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Wage Slave Journal
Around 800 dollar for the three year plan, minus 400 for the rebate, equals about 400 for 3 years of internet access, or a little over 10 dollars a month
Nope. $800 for the PC, minus $400 for the rebate, equals $400 for the PC after rebate. The Internet access costs $21.95 per month (apparently AOL sets the trend for such things) for three years, which you must pay even if you never use it or decide to go with DSL instead. The $400 rebate winds up saving you negative $390.20 after you pay for your 36 months of Internet service.
For more information, click here.
I think the FTC could easily solve this problem once and for all with one single step. On each box, the manufacturers should be required to print, in big letters:
"There Aint No Such Thing As A Free Lunch".
A few years ago, the most complicated agreement I had to deal with was my rental agreement. Then came my employment agreement. That was bad enough, and most other things were relatively painless; I had a health insurance policy which was described in 5 pages. Not too bad.
Now adays it's far far worse. My last health insurance policy was some 50 pages... totally incomprehensible. With complicated legal agreements, a summary in large print is absolutely necessary... and that summary needs to be fairly accurate. Leaving out essential items from the large print like... "only valid w/ rebate" or "only with 2 year $500 service contract" is just plain old deception. Period.
Pretty soon we will be facing an 15 page ELUA for music CDs on the shrink wrap. I don't have time to scan every legal agreement... do you? What if it says you can't use it with a non-sony player... on page 4, 6th paragraph, sentance 2?
We have a right to expect the large print to accurately reflect the legaleaze for every day transactions.
Good grief! Is it not simple enough to make a law that says, "The price you advertise next to a product must match the product advertised?"
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Have fun: Join D.N.A. (National Dyslexics Association)
But whether or not you think the average person is stupid or smart, one thing is absolutely true: he is not able to be well informed on every subject necessary to make him a good consumer. And as long as they are able, companies will take advantage of that fact in order to bleed as much money out of him as possible. Whether they do it through outright fraud or through somewhat deceptive practices, it's going to happen. Marketing works, and it's something that is by its very nature deceptive. (Yes, I know there are exceptions.)
As for the fact that libertarians believe that government should fight fraud--good, I'm glad you think so. I guess I assumed that they would think it wasn't fraud in this case because a well informed consumer would know better. To me, that isn't a fair standard. (I realize that it sounds fair. Doesn't make it so.) Tell me, do you think it's fraud in this case?
Would you really want to live in an "idiot proof" society? Are you willing to give up your rights as an adult in order to have the government raise you children for you?
These questions really cut too broad strokes for me to answer them intelligently, and I'm not sure they're relevant. Mostly they seem rhetorical.
Are you willing to give up a free market in order to avoid having to read the fine print?
If you mean perfectly free, yes. Absolutely. Only not to give up reading the fine print. I just don't want it to be fine. What do I really want? A society based on truth, rather than deception.
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Wage Slave Journal
Most people don't read the contract. First of all, they don't understand all the words in the contract, they're usually full of lawyer double-talk that makes it necessary for the typical person to have it explained. Much legal-speak has completely different meanings from the ones in common use. Think of "in camera"; most of us don't speak latin anymore, and consider a camera a device for taking pictures. How bloody hard would it be to say "in the room"?
Secondly, they put so much boilerplate garbage in there that it is extremely tedious reading. Paid at the wages I'd draw for reviewing such documents, the effort of reading would often be more costly than the real price of the service.
That sheer length also makes you tend to skim, if you do read it. Instead of looking at every word and thinking "what does that really mean?" (as you should do when dealing with anything written by a lawyer) you are tempted to take things at their first appearance.
People really should start saying "No, I'm not signing that, this (lease/license/service/purchase) is a simple thing and the contract should be under a page of normal-sized type." But it's become such common practice that you simply wouldn't be able to get many services without signing a contract that the average person just can't fully understand.
It would take an organized effort to end small-print trickery. Maybe such a group already exists... I'm going searching, I want to join!
People in stone houses shouldn't throw glass.
No wait, stoned people in glasses shouldn't throw houseparties.
No, that's not it, housepeople should use stonewear not glasses.
Forget it. I may not make sense, but at least I grammar right.
Big Brother is always watching because Average Joe User is daft.
$0 for a CPU
$250 for a monitor
$225 for CompUSA service contract
$21/mo for 3 years = $756
Total for a cheap piece of garbage: $1231
Not exactly rocket science!
JHK
Pop never sounded this good before!
Just want to explain...
Many people have complained in the past that what they get at/from a restaurant doesn't look like what they saw on TV. There is a good reason for this...
Heat.
Specifically, heat from the lamps used to light the "scene" being shown of the food. These lights get damn hot (ask an actor), and food can't stand up too them, so they "fake" the food up in many ways (like motor oil being used for syrup).
I saw a show on FoodTV (or some other channel) about this - they showed how they made "roasted" turkey for those Thanksgiving meals you see on TV come November/December - they take a regular turkey (or chicken, or whatever), and use a heat gun on it! Makes it nice and brown on the outside, as even colored as they want, in no time flat. Use a knife to cut a little breast meat, then "roast" that with the heat gun. Spray a bit of oil on it - voila! - instant turkey.
For the turkey, though, it wasn't so much about heat as it was about time, and appearance - it takes a good cook to make a great looking turkey, and even then, they couldn't get it done in the 30 minutes it takes to make a "fake" roast turkey...
Reason is the Path to God - Anon
In my humble opinion, the worst form of PC deception has always been the monitor advertisemnts. All the monitors you see in the magazines and stuff have the pictures just pasted into the frame, they're not really rendered on the monitor. When I was little, I could never understand the concept that the picture of the monitor showing pic of a jaguar from so close you can see its whiskers is really no better then the monitor down below showing a pacman board, and that the just try to make the more expensive ones look better. Oh well, just my thoughts.
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Wage Slave Journal
Now, I'm going to have breakfast! -_^
Caveat Emptor.
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In the bad old days of high fidelity audio equipment, there was a contest among the manufacturers and retailers to see who could write the most misleading ads for audio amplifiers. You would see ads for a 500 Watt audio amplifier, which meant that the amplifier produced 500 Watts, in one channel, for 10 milliseconds, at 90% total harmonic distortion, with a 1% duty cycle. This was unfair to ethical companies that advertised realistic power ratings. The FTC cracked down on the audio industry and made everyone use realistic measurement techniques.
Mea navis aericumbens anguillis abundat
This doesn't count the TCO of the pieces of crap you get. My mother got an eMachine a year ago. It had a fan that sounded like a Harrier, so we sent it back. Every time we sent it back (paying $25 one-way shipping) we got a new machine, meaning we had to set up all the software again, and a new hardware problem always surfaced in the space of two weeks. Going on newsgroups, I discovered that most of these problems are endemic throughout their product line (particularly the unreasonably noisy fan). The FTC should require total cost of ownership disclosures--that machine must have cost us $500 in shipping and time alone.
It's not as if these are the first companies to advertise like this. However, it is encouraging that the FTC is going after some but this is hardly scratching the surface. Granted, we aren't dealing with robbery here so I doubt this is an urgent matter for the FTC but I wish they would step in on more issues surrounding technology. For example, it should be a crime for Microsoft to continue releasing operating systems that still do not operate. (that sounds like false advertising to me!) :) PS - sorry for the predictable microsoft rant
?/o
Is FTC going to get angry over this too? I know there's a catch for Free DSL. :)
Ant(Dude) @ Quality Foraged Links (AQFL.net) & The Ant Farm (antfarm.ma.cx / antfarm.home.dhs.org).
Falls advertising is not good. This is why I *woldn't* go after "PeoplePC". They have cheesy adds but at least they claim you are renting a PC and internet connection for $X.
Claiming that something is free when people have to pay for it out of pocket is not healthy. That's rude.
--= Isn't it surprising how badly I spell ?
a lot of people are complaining that the government shouldn't be protecting people this way, that it's easy to do the math, if people are that stupid, they deserve to lose their money, blah, blah, blah.
i completely disagree. the gov exist for all people, even the stupid ones. a company with some decent marketing can do a lot of damage to consumers before the gov catches up and puts a stop to it, and if the FTC wants to come down on these dumb ads, more power to them.
one of my friends works with autistic people, and *some* of them just give their money away. they have no idea what it is. they just figure "if you want it, here ya go".
presumably, there are other people out there that are more functional, but still gullible enough to fall for this "free pc" bs.
i see no reason why the wolves of our society should be able to prey on them unhindered. if you have to spend money to get the device, then it's not free, and the ads should be clearer.
Treatment, not tyranny. End the drug war and free our American POWs.
See my user info for links.