UNITED STATES OF AMERICA In the Matter of GATEWAY, INC., a corporation. DOCKET NO. COMPLAINT The Federal Trade Commission, having reason to believe that Gateway, Inc., a corporation ("respondent"), has violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges: 1. Respondent Gateway, Inc. is a Delaware corporation with its principal office or place of business at 610 Gateway Drive, North Sioux City, South Dakota 57049. 2. Respondent has manufactured, advertised, labeled, offered for sale, sold, and distributed products and services to the public, including personal computers, computer peripherals, software, and Internet services. 3. The acts and practices of respondent alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act. 4. Respondent has disseminated or has caused to be disseminated advertisements for certain of its personal computers, including but not necessarily limited to the attached Exhibits A through F. These advertisements contain the following statements and depictions:
5. Through the means described in Paragraph 4, including but not necessarily limited to Exhibits A through D, respondent has represented, expressly or by implication, that with the purchase of the advertised computer models, one year of Gateway.net Internet access would be free or included at no extra charge. 6. In truth and in fact, with the purchase of the advertised computer models, for many consumers one year of Gateway.net Internet access was not free or included at no extra charge because these customers incurred long distance charges to access Gateway.net or were charged $3.95 per hour to use respondent's 1-888 telephone number to access the service. Therefore, the representation set forth in Paragraph 5 was, and is, false or misleading. 7. Through the means described in Paragraph 4, including but not necessarily limited to Exhibit E, respondent has represented, expressly or by implication, that with the purchase of the advertised computer models, the total cost to consumers for Gateway.net Internet access would be a flat fee, such as $14.95 per month. 8. In truth and in fact, with the purchase of the advertised computer models, the total cost to many consumers for Gateway.net Internet access was not a flat fee, such as $14.95 per month because these customers incurred long distance charges to access Gateway.net or were charged $3.95 per hour to use respondent's 1-888 telephone number to access the service. Therefore, the representation set forth in Paragraph 7 was, and is, false or misleading. 9. Through the means described in Paragraph 4, including but not necessarily limited to Exhibit F, respondent has represented, expressly or by implication, that the use of respondent's "toll free" 1-888 number to connect to the Internet was free to consumers. 10. In truth and in fact, the use of respondent's "toll free" 1-888 telephone number to connect to Gateway.net was not free to consumers. Consumers were charged $3.95 per hour for the use of this number. Therefore, the representation set forth in Paragraph 9 was, and is, false or misleading. 11. In its advertising and sale of certain computer models, respondent has represented, expressly or by implication, that the cost of using the Internet for one year would be zero, or that Internet service could be purchased for a flat monthly fee, such as $14.95 a month. Respondent has failed to disclose adequately before purchase that many consumers would incur significant, additional costs such as long distance telephone charges or charges for the use of "toll free" 1-888 numbers to connect to the Internet. This fact would be material to consumers in their purchase or use of the service or product. The failure to adequately disclose this fact, in light of the representation made, was, and is, a deceptive practice. 12. The acts and practices of respondent as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Sections 5(a) of the Federal Trade Commission Act. THEREFORE, the Federal Trade Commission this day of , , has issued this complaint against respondent. By the Commission. Donald S. Clark SEAL: |