FTC Consumer Alert

Federal Trade Commission ■ Bureau of Consumer Protection ■ Office of Consumer and Business Education

‘Free’ and ‘Low-Cost’ PC Offers:

Go Figure

Washington, D.C. – You’ve probably seen the ads for “low cost” PC’s—“PC’s for $199”—or

even “free” computers. If you’re in the market for a personal computer, the Federal Trade Commission (FTC) wants you to know that “free” doesn’t always mean free. Very often, certain conditions

and restrictions found in the fine print of advertisements for “free” or “low cost” PC’s can turn a

so-called deal into a big ticket buy.

“Free” or “low-cost” PC offers often require “bundled” Internet service contracts, which may last

up to three years. In return for signing up for Internet service, you can get as much as a $400 rebate

on the computer purchase. While some of these offers can be good deals, many are not as affordable as

they may seem. Frequently, important details about the rebate and Internet service offer are difficult to

ferret out because they’re left out of the advertising or buried in the fine print.

Up-Front Costs

To get a “low cost” PC, you may have to pay the full cost of the computer up front—that is, the

total price without any rebates. If the PC is advertised for $199 after rebates, you may have to pay

$599, plus any sales tax and shipping charges, and then send for the $400 rebate.

Usually, you have to apply for the rebate in writing, mail in documentation of the sale and then

wait—sometimes months—until you receive your rebate check. Sometimes “instant” rebates are offered

and you can get your deduction immediately. But some offers allow you to spend the rebate only on

other merchandise from the manufacturer or retailer, meaning you still have to pay the full price for the

computer.

Internet Access

When you buy a “free” or “low cost” computer, you often have to sign up for three years of

Internet service at $20-$30 a month—a total cost of up to $1,000 for three years. Technology is changing at a dizzying pace. It’s possible that the three-year Internet service you lock in today could be out

of date in six months or a year. And if you’d like to cancel your service, you’ll likely have to pay a

substantial penalty.

If you decide to cancel your Internet service for any reason, chances are you’ll have to pay back

some or all of the rebate you received; you also may have to pay a cancellation fee of $50 or more.

If you don’t live in a major metropolitan area, you may have to pay long distance telephone

charges to access the Internet. Or you also may be able to use a “toll-free” (800, 888 or 877) number

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supplied by the Internet Service Provider (ISP), but you may be charged five or six dollars an hour to

use their “toll-free” number. Whether you choose to use the ISP’s telephone number or pay

long-distance charges, your phone calls to access the Internet could add up to more than you’ll save

through the rebate.

If the PC offer requires you to sign-up for Internet service, ask the retailer and the ISP for the

Internet access phone numbers closest to you. Then check with your local phone company to determine

whether you have to pay long distance rates to use those phone numbers. You may want to consider

another offer if the “deal” you’re considering requires you to call long distance or pay a fee to access

the Internet.

Other Costs

It’s possible that the cost of a monitor or other crucial system components may not be included in

the PC offer you’re considering. The advertisements for the offer may not be clear about what’s

included. If you have to buy a monitor, for example, plan on spending at least an additional $150.

When considering a “free” or “low cost” PC offer, ask the retailer about up-front costs, rebates,

essential components, Internet access costs, long-term commitments, cancellation policies, local or long

distance phone access and any other important issues. Details will help you make the deal that’s right

for you.

Filing a Complaint

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 consumer issues, call toll-free, 1-877-FTC-HELP (1-877-382-

4357), or use the complaint form at www.ftc.gov. The FTC enters Internet, telemarketing, identity

theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to

hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

June 2000

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