Sharp Electronics to Provide Redress for Allegedly Misleading Consumers about its Handheld Personal Computers

Under the terms of a proposed consent agreement reached with the Federal Trade Commission and announced today, Sharp Electronics Corp. ("Sharp"), one of the world's largest electronics manufacturers and sellers, has agreed to provide low-cost upgrades to owners of certain Mobilon Handheld Personal Computers ("HPCs") for allegedly misleading them about the product's upgradability to the latest version of the Microsoft Windows CE operating system. The Commission's complaint contends that, while Sharp had previously determined it would not make the systems upgradable, for several months the company continued to advertise this feature to prospective purchasers. Through the settlement, consumers who bought a Mobilon 4100, 4500 or 4600 during part of 1999 and 2000 will have to pay only a $10 shipping and handling charge to have their systems upgraded. Sharp would also be prohibited from making false upgradability claims in the future.

"Promoting a product as upgradable when it isn't, just does not compute," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "The Commission takes all instances of false or deceptive advertising very seriously, and we are pleased that Sharp has agreed to provide the upgrades it promised consumers for only a nominal charge."

According to the Commission's complaint, for several months in 1999 and 2000 Sharp, which is based in Mahwah, New Jersey and had U.S. sales of $3.1 billion in 1997, falsely advertised that its Mobilon HPCs could be upgraded to a later version of the Microsoft Windows CE operating system when such a system became available. Many HPCs currently on the market use this system that also contains several applications, including a wordprocessor, spreadsheet and database.

The FTC contends, however, that while Sharp claimed that it would make such an upgrade available to its customers, it never offered purchasers of its Mobilon HPCs an opportunity to upgrade when the later version of Windows CE became available. In fact, for several months after deciding not to offer such an upgrade, the Commission says, the company continued to advertise that its Mobilon HPCs were upgradable.

Under the terms of the consent order, Sharp would be prohibited from engaging in similar behavior in the future. Specifically, the company would be barred from misrepresenting the availability of any upgrade product. In addition, for those consumers who purchased Mobilon HPC Models 4100, 4500 or 4600 and were promised upgrades, Sharp would be required to provide an upgrade for a $10 shipping and handling charge. Consumers would either be able to submit an upgrade claim form that they received in the mail from the company, or request the upgrade over the Internet. A message alerting consumers to the upgrade opportunity would be posted on Sharp's Web site.

Finally, Sharp would be required to meet certain provisions to ensure the company complies with the terms of the order, including reporting requirements. The terms would "sunset" in 20 years, with certain exceptions as specified in the order.

The Commission vote to accept the consent agreement for public comment was 5-0. A summary of the agreement will be published in the Federal Register shortly. Comments may be submitted for 30 days, until February 26, 2001, after which the Commission will determine whether to make the agreement final. Comments should be sent to: FTC Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580.

NOTE: The consent agreement referenced in this release 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, consent agreement and an analysis of the agreement 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. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form.

The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.

(FTC File No. 992-3263)