Apple Computer, Inc.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 982 3005]

Apple Computer, Inc.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

[[Page 5298]]

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged

violations of federal law prohibiting unfair or deceptive acts or

practices or unfair methods of competition. The attached Analysis to

Aid Public Comment describes both the allegations in the draft

complaint that accompanies the consent agreement and the terms of the

consent order--embodied in the consent agreement--that would settle

these allegations.

DATES: Comments must be received on or before April 5, 1999.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 600 Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: Matthew D. Gold or Linda K. Badger,

San Francisco Regional Office, Federal Trade Commission, 901 Market

Street, Suite 570, San Francisco, CA 94103, (415) 356-5275 or 356-5276.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), notice is hereby

given that the above-captioned agreement containing a consent order to

cease and desist, having been filed with and accepted, subject to final

approval, by the Commission, has been placed on the public record for a

period of sixty (60) days. The following Analysis to Aid Public Comment

describes the terms of the consent agreement, and the allegations in

the complaint. An electronic copy of the full text of the consent

agreement package can be obtained from the FTC Home Page (for January

26, 1999), on the World Wide Web, at http://www.ftc.gov/os/

actions97.htm. A paper copy can be obtained from the FTC Public

Reference Room, H-130, 600 Pennsylvania Avenue, N.W., Washington, D.C.

20580, either in person or by calling (202) 326-3627. Public comment is

invited. Such comments or views will be considered by the Commission

and will be available for inspection and copying at its principal

office in accordance with Section 4.9(b)(6)(ii) of the Commission's

Rules of Practice (16 CFR 4.9(b)(6)(ii).

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement, subject to

final approval, to a proposed consent order from Apple Computer, Inc.

(hereinafter ``Apple'' or ``respondent''). Apple is a major

manufacturer and marketer of personal computer hardware and software

products.

The proposed consent order has been placed on the public record for

sixty (60) days for the reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and any comments received and will decide whether it should

withdraw from the agreement and take other appropriate action or make

final the agreement's proposed order.

This matter has focused on Apple's advertisements for its ``Apple

Assurance'' program. Under Apple Assurance, which Apple offered on most

of its hardware products from September 1992 to April 1996, consumers

who purchased Apple products in the United States were entitled to free

access to technical support personnel for as long as they owned their

Apple product. In October 1997, however, Apple began charging Apple

Assurance consumers $35 for such access. Accordingly, the proposed

complaint alleges that the company falsely claimed that Apple Assurance

customers would have access to Apple technical support personnel, at no

charge, for as long as that customer owns the product.

The proposed order contains cease and desist provisions as well as

complete redress for consumers harmed by Apple's conduct. Part I of the

proposed order would prevent Apple from misrepresenting the terms of

any technical support service offered in conjunction with any product.

Part II would require that the company reinstate its promise to

Apple Assurance customers, and provide live, free technical support for

as long as they own their computers. Specifically, this provision

requires that the company provide access to complimentary technical

support personnel, toll-free, to each ``eligible person'' who provides

the valid serial number of a ``covered product'' for as long as such

person owns the covered product. The order defines ``eligible person''

as any original owners, or member of the owner's immediate family, who

purchased a ``covered product.'' A ``covered product'' is an Apple

product sold in the United States between September 1992 and April

1996. Appendix A to the order includes a list of all models sold during

this period of time. Under the terms of Part II of the order, Apple

would be permitted to suggest that an eligible person seek answers to

questions via less expensive means (such as through pre-recorded phone

trees, the Internet, or product manuals), as long as the person always

has the option of speaking to live technical support personnel.

Part III of the proposed order would require Apple to reimburse

each eligible person who has wrongly paid any fee for technical support

as a result of Apple's actions. Pursuant to the order, Apple must send

a ``Notice of Refund'' to each such person within 20 days of service of

the order. The Notice of Refund must include either a refund check or a

notification of a credit to the customer's credit card account for the

full amount paid for technical support services. Further, the Notice

informs these customers of their continuing right to free, live,

technical support for as long as these customers, or members of their

immediate families, own their Apple products.

The proposed order also requires the respondent to maintain

materials relied upon to substantiate claims covered by the order, to

provide a copy of the consent agreement to all employees or

representatives with duties affecting compliance with the terms of the

order; to notify the Commission of any changes in corporate structure

that might affect compliance with the order; and to file one or more

reports detailing compliance with the order.

The purpose of this analysis is to facilitate public comment on the

proposed order, and it is not intended to constitute an official

interpretation of the agreement and proposed order, or to modify in any

way their terms.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 99-2487 Filed 2-2-99; 8:45 am]

BILLING CODE 6750-01-M