Computer Software Manufacturer Agrees to Settle Charges of Software Misrepresentation

Syncronys Softcorp, of Culver City, California, and three of the company’s officers have agreed to settle Federal Trade Commission charges that they misrepresented and/or failed to substantiate the performance of two computer software programs they manufactured. The two programs, “SoftRAM” -- released in May 1995 -- and “SoftRAM95” -- introduced in August 1995 -- were widely advertised and promoted for their purported ability to improve the performance of personal computers using Microsoft, Inc.’s popular Windows and Windows 95 programs. The company sold 600,000 copies of SoftRAM95 between August 1995 and December 1995. In December 1995, during the course of the FTC's investigation, the company recalled both SoftRAM and SoftRAM95 from the market.

The FTC’s complaint alleges that the company did not possess a reasonable basis to substantiate the various performance claims contained on product packaging and in advertisements. The FTC also alleged that certain performance claims, as well as an endorsement claim, were false. Under the proposed settlement agreement, Syncronys Softcorp and its officers would be prohibited from making the same type of misrepresentations alleged in the complaint concerning SoftRAM95 for that product or any substantially similar product. They also would be prohibited from making representations about the performance, attributes, benefits, or effectiveness of SoftRAM, SoftRAM95 , or any substantially similar product unless the representations were true and substantiated. Further, the respondents would not be able to make claims that any product intended to improve computer performance had been licensed, endorsed, or certified by any other organization unless those representations were true. Finally, the respondents would be barred from making unsubstantiated claims about the performance, attributes, benefits, or effectiveness of any product intended to improve computer performance.

Along with Syncronys Softcorp (“Syncronys”), the FTC’s complaint names as respondents Rainer Poertner, Daniel G. Taylor, and Wendell Brown, all officers of the company.

According to Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection, “Syncronys promised consumers an inexpensive software ?fix’ for a computer hardware problem -- inadequate RAM. Hundreds of thousands of consumers relied on Syncronys’ claims to double Windows 95 computers’ RAM. What they got was a snazzy looking software package that didn’t increase RAM one bit.” Bernstein added, “consumers shopping for high tech products often have to rely on sellers to have solid evidence to back up their claims. We will continue to monitor performance claims for high tech products to make sure that companies have sound reason to believe that consumers will get the promised performance.”

Technical Background

A personal computer must contain sufficient “random access memory” (“RAM”) in order to load and process its own operating instructions as well as the applications programs being used, such as word processing and spreadsheet programs. As computer programs have become more powerful, they have required considerably more RAM. If a computer has insufficient RAM to meet the user’s needs, it may operate sluggishly, refuse to run large or multiple programs, or “crash” by shutting itself down. Consumers can purchase additional RAM in the form of memory chips, which may cost several hundred dollars.

SoftRAM

Beginning in May 1995, Syncronys promoted SoftRAM, a software utility program, to users of Microsoft Windows 3.0, 3.1, and 3.11 (collectively “Windows 3.x”) as a cheaper alternative to the purchase and installation of additional RAM. In advertisements and product packaging, Syncronys claimed that SoftRAM would compress a computer’s memory, permitting significantly more data to reside in RAM than otherwise would be possible. Such RAM “doubling,” the company claimed, would result in performance benefits, including enhanced speed and capacity. The company sold approximately 100,000 copies of SoftRAM.

The FTC’s complaint charges that the company and its officers did not possess and rely upon a reasonable basis to substantiate their representations for SoftRAM.

SoftRAM95

In August 1995, Microsoft, Inc. introduced its widely publicized operating system, Windows 95. Both before and after the introduction of Windows 95, considerable notice was taken by prospective purchasers of the fact that Windows 95 and applications sold for use with it would be particularly “memory hungry,” requiring at least eight megabytes of RAM and preferably 16. The great number of computer users with only four or eight megabytes of RAM in their computers frequently were cautioned that they could upgrade effectively to Windows 95 only by acquiring additional RAM. Syncronys positioned SoftRAM95 as a cheaper, but equally effective, alternative to adding RAM to computers that otherwise would not have had adequate memory to effectively run Windows 95 and made-for-Windows 95 applications. According to the FTC, Syncronys claimed that SoftRAM95, like its predecessor, SoftRAM, would “double” RAM and thereby enhance the speed, capacity, and other performance measures of a computer using Windows 3.x or Windows 95. In just a few months, the company sold approximately 600,000 copies of SoftRAM95.

According to the FTC’s complaint, SoftRAM95 does not increase RAM in a computer using Windows 95; nor does the product enhance the speed, capacity, or other performance measures of a computer using Windows 95. Additionally, although Syncronys used Microsoft’s “Designed for Windows 95” logo on product packaging, Microsoft had not licensed, endorsed, or otherwise approved SoftRAM95 for use with Windows 95. According to the FTC, the representations made by Syncronys for SoftRAM95 for use with Windows 95 were therefore false and misleading. The FTC further alleged that Syncronys did not possess and rely upon a reasonable basis that substantiated the representations made for SoftRAM95 for use with either Windows 3.x or Windows 95.

The proposed consent agreement to settle the FTC’s charges, announced today for a public comment period, would prohibit the respondents from making the same type of alleged misrepresentations about the performance of SoftRAM95 or any substantially similar product when used with Windows 95.

Further, in connection with SoftRAM, SoftRAM95, or any substantially similar product, the proposed agreement would prohibit any representations about such product’s effectiveness, performance, attributes, or benefits, unless the representations are true and the respondents possess and rely upon competent and reliable evidence, which when appropriate must be scientific evidence, to substantiate such representations. The proposed settlement also would ban any representation that any product intended to improve computer performance is licensed, endorsed, authorized, or certified by any person or organization unless that claim were true. Finally, the proposed order would require substantiation for claims regarding the performance, attributes, benefits, or effectiveness of any product intended to improve computer performance.

The Commission vote to accept the proposed consent agreement for comment was 5-0. The proposed consent agreement will be published in the Federal Register shortly and will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000.

Copies of the complaint, the proposed consent agreement and an analysis of the agreement to aid in public comment are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(FTC File No. 962 3002)