Miami Mail Order Retailer of Computer Products Agrees to Settle Advertising and Warranty Issues

Tiger Direct, Inc., a large mail order seller of computer products, has agreed to settle Federal Trade Commission charges that it made false and misleading statements in its ads and promotional materials about its on-site warranty service. The FTC alleged that Tiger Direct unqualifiedly represented that it would provide one year on-site warranty service for Tiger-brand computer systems, which it depicted in its ads as including a keyboard, speakers and a mouse, and that it would provide such warranty service within a reasonable period of time. In fact, the FTC said, the company provided on-site service only in limited circumstances and would not provide such service for the computer mouse, keyboard and speakers. Further, consumers that requested warranty service endured frustrating and lengthy delays. The FTC alleged that by disclaiming implied warranties, failing to disclose material warranty terms, and failing to clearly designate its warranty as "full" or "limited," Tiger Direct violated provisions of the Magnuson-Moss Warranty Act, and the FTC's Pre-Sale Availability Rule and the Disclosure Rule. The proposed settlement would prohibit Tiger Direct from misrepresenting the terms and conditions of its on-site warranty and require it to comply with the relevant provisions of the Warranty Act, the Disclosure Rule, and the Pre-Sale Availability Rule.

Tiger Direct, based in Miami, Florida, advertises, sells and distributes computer products, including hardware, software, and accessories, in catalogs, magazines, package inserts, by direct mail, and on the Internet. Tiger Direct sells brand name computer products - such as Compaq, Hitachi and Toshiba - as well as its own "Tiger" brand. Its ads and promotional materials contained statements such as "ONE-YEAR ON-SITE WARRANTY!" for its Tiger-brand computer "complete systems."

The complaint alleges that Tiger deceptively advertised that it would provide on-site warranty service to purchasers of its computer systems when notified that the system or any of its parts were defective or malfunctioned and would do so within a reasonable period of time after being notified. The complaint further alleges that Tiger Direct violated the Magnuson-Moss Warranty Act by failing to properly designate its warranty as either "full" or "limited" and by disclaiming any implied warranties in its warranty statement. In addition, the complaint alleges,

Tiger Direct violated the Pre-Sale Availability Rule by failing to disclose material warranty terms and violated the Disclosure Rule by failing to clearly and conspicuously disclose in writing: what the warrantor will not pay for or provide; a step-by-step explanation of the procedure to follow in order to be covered by the warranty; that consumers may have other rights that vary from state to state; and that Tiger Direct's "Limitation of Liability" may not apply to consumers in some states.

The proposed consent agreement, announced today for public comment, would prohibit Tiger Direct from representing that it provides on-site warranty service without disclosing all limitations or conditions that apply to obtaining the on-site service. The proposed settlement would require the respondent to provide such warranty service within a reasonable period of time, defining "reasonable period of time" as that time period clearly stated in Tiger Direct's ads and promotional materials or, if no time is stated, no later than 30 days after the respondent receives notice from the consumer of a computer problem.

In addition, the proposed settlement contains provisions that would prohibit Tiger Direct from future violations of the Pre-Sale Availability Rule, the Disclosure Rule and the Warranty Act. The proposed settlement also contains various recordkeeping provisions designed to assist the Commission in monitoring Tiger Direct's compliance.

The Commission vote to accept the proposed consent agreement for public comment was 4-0.

An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. The agreement 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, 600 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 $11,000.

Copies of the complaint, the proposed consent agreement and an analysis of the proposed consent order to aid public comment are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 972 3075)