UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION

In the Matter of

APPLE COMPUTER, INC., a corporation.

FILE NO. 982-3005

AGREEMENT CONTAINING  CONSENT ORDER

The Federal Trade Commission has conducted an investigation of certain acts and practices of Apple Computer, Inc., a corporation ("proposed respondent"). Proposed respondent, having been represented by counsel, is willing to enter into an agreement containing a consent order resolving the allegations contained in the attached draft complaint. Therefore,

IT IS HEREBY AGREED by and between Apple Computer, Inc., and counsel for the Federal Trade Commission that:

1. Proposed respondent Apple Computer, Inc., is a California corporation with its principal office or place of business at One Infinite Loop, Cupertino, California 95014.

2. Proposed respondent admits all the jurisdictional facts set forth in the draft complaint.

3. Proposed respondent waives:

a. Any further procedural steps;
 
b. The requirement that the Commission's decision contain a statement of findings of fact and conclusions of law; and
 
c. All rights to seek judicial review or otherwise to challenge or contest the validity of the order entered pursuant to this agreement.

4. This agreement shall not become part of the public record of the proceeding unless and until it is accepted by the Commission. If this agreement is accepted by the Commission, it, together with the draft complaint, will be placed on the public record for a period of sixty (60) days and information about it publicly released. The Commission thereafter may either withdraw its acceptance of this agreement and so notify proposed respondent, in which event it will take such action as it may consider appropriate, or issue and serve its complaint (in such form as the circumstances may require) and decision in disposition of the proceeding.

5. This agreement is for settlement purposes only and does not constitute an admission by proposed respondent that the law has been violated as alleged in the draft complaint, or that the facts as alleged in the draft complaint, other than the jurisdictional facts, are true.

6. This agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of Section 2.34 of the Commission's Rules, the Commission may, without further notice to proposed respondent, (1) issue its complaint corresponding in form and substance with the attached draft complaint and its decision containing the following order in disposition of the proceeding, and (2) make information about it public. When so entered, the order shall have the same force and effect and may be altered, modified, or set aside in the same manner and within the same time provided by statute for other orders. The order shall become final upon service. Delivery of the complaint and the decision and order to proposed respondent by any means specified in Section 4.4 of the Commission's Rules shall constitute service. Proposed respondent waives any right it may have to any other manner of service. The complaint may be used in construing the terms of the order. No agreement, understanding, representation, or interpretation not contained in the order or in the agreement may be used to vary or contradict the terms of the order.

7. Proposed respondent has read the draft complaint and consent order. Proposed respondent understands it may be liable for civil penalties in the amount provided by law and other appropriate relief for each violation of the order after it becomes final.

ORDER

DEFINITIONS

For the purposes of this order, the following definitions shall apply:

1. Unless otherwise specified, "respondent" shall mean Apple Computer, Inc., a corporation, its successors and assigns, and its officers, agents, representatives and employees.
 
2. "Covered product" shall mean a product listed in Appendix A that was purchased in the United States.
 
3. "Eligible person" shall mean the original owner (or original user) of a covered product, or any member of the immediate family of such person.
 
4. "Commerce" shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. 44.

I.

IT IS ORDERED that respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any product, in or affecting commerce, shall not misrepresent, in any manner, expressly or by implication, the terms of any technical support service offered in conjunction with the sale of such product.

II.

IT IS FURTHER ORDERED that respondent, directly or through any corporation, subsidiary, division, or other device, shall provide access to technical support personnel, at no charge, to each eligible person who provides the valid serial number of a covered product for as long as such person owns the covered product. Such access shall be available within the United States through a toll-free telephone number.

III.

IT IS FURTHER ORDERED that respondent, directly or through any corporation, subsidiary, division, or other device, shall in accordance with this Part, provide a refund to each eligible person who has paid to respondent a fee for technical support services for a covered product, and notify each such person that future technical support for the covered product will be available at no charge.

A. Within five (5) days from the date of service of this order, respondent shall compile a list containing (1) the name and last known address of each eligible person who has paid to respondent a fee for technical support services for a covered product; and (2) the total amount each such person has paid. In addition, respondent shall retain a National Change of Address System ("NCOA") licensee to update this list by processing the list through the NCOA database.

B. Within twenty (20) days of the date of service of this order, respondent shall send via first-class mail, postage prepaid, a Notice of Refund in the form set forth in Appendix B to each eligible person whose name appears on the list required by Part III.A of this order. Respondent shall credit the eligible person's credit card account for the amount reflected on the list required by Part III.A of this order, and include notification of this action in the Notice of Refund. Alternatively, respondent shall include with the Notice of Refund a refund check for the amount reflected on the list required by Part III.A of this order.

C. No information other than that contained in Appendix B shall be included in or added to the Notice of Refund, nor shall any other material be transmitted therewith, except for (1) a refund check, if appropriate; and (2) a copy of Appendix A, at respondent's discretion. The envelope containing the Notice of Refund shall be in the form set forth in Appendix C. For each mailing returned by the U.S. Postal Service as undeliverable for which respondent thereafter obtains a corrected address, respondent shall, within fifteen (15) business days after receiving the corrected address, send a Notice of Refund and, if required by Part III.B of this order, a refund check, to the corrected address.

D. For a period of one hundred twenty (120) days from the date of service of this order, respondent shall send a Notice of Refund and, if required by Part III.B of this order, a refund check, to each eligible person who: (1) paid a fee for technical support services for a covered product; (2) was not reimbursed pursuant to Part III.B; and (3) contacts respondent or the Commission in any manner. Each mailing shall be made within fifteen (15) days after respondent receives such person's name and address.

E. For a period of one hundred twenty (120) days from the date of service of this order, respondent shall provide, and adequately staff during ordinary business hours, a toll-free telephone number to answer questions and provide information relating to this refund program.

F. Within one hundred fifty (150) days of the date of service of this order, respondent shall furnish to Commission staff the following:

1. A computer print-out copy of the list required by Part III.A of this order, as well as the list in computer readable form (as set forth in Appendix D);
 
2. In computer readable form (as set forth in Appendix D) and in computer print-out form, a list of the names and addresses of each eligible person who was sent a Notice of Refund pursuant to Part III.B of this order, and for each name included on the list, either (a) the amount, check number and mailing date of the refund check; or (b) the amount credited to the credit card account and the mailing date of the Notice of Refund;
 
3. In computer readable form (as set forth in Appendix D) and in computer print-out form, a list of the names and addresses of all consumers who contacted respondent or were referred to respondent by the Commission in accordance with Part III.D of this order;
 
4. Copies of all correspondence and other communications to, from, or concerning all consumers who requested a refund but were refused, and the reason(s) for denying the refund;
 
5. All copies of the Notice of Refund returned to respondent as undeliverable; and
 
6. All other documents and records evidencing efforts made and actions taken by respondent to identify, locate, contact and provide refunds to consumers requesting a refund.

IV.

IT IS FURTHER ORDERED that respondent, and its successors and assigns shall, for five (5) years after the last date of dissemination of any representation covered by this order, maintain and upon request make available to the Federal Trade Commission for inspection and copying:

A. All advertisements and promotional materials containing the representation;
 
B. All materials that were relied upon in disseminating the representation; and
 
C. All tests, reports, studies, surveys, demonstrations, or other evidence in their possession or control that contradict, qualify, or call into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations.

V.

IT IS FURTHER ORDERED that respondent, and its successors and assigns, shall deliver a copy of this order to all current and future principals and directors; to all current and future officers and managers with responsibilities or duties affecting compliance with the terms of this order; and to all current and future employees, agents, and representatives having responsibilities with respect to the subject matter of this order. Respondent shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and, for a period of five (5) years from the date of issuance of this order, to future personnel within thirty (30) days after the person assumes such position or responsibilities.

VI.

IT IS FURTHER ORDERED that respondent, and its successors and assigns, shall notify the Commission at least thirty (30) days prior to any change in the corporation that may affect compliance obligations arising under this order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent or affiliate that engages in any acts or practices subject to this order; the proposed filing of a bankruptcy petition; or a change in the corporate name or address. Provided, however, that, with respect to any proposed change in the corporation about which respondent learns less than thirty (30) days prior to the date such action is to take place, respondent shall notify the Commission as soon as is practicable after obtaining such knowledge. All notices required by this Part shall be sent by certified mail to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C. 20580.

VII.

IT IS FURTHER ORDERED that respondent, and its successors and assigns, shall, within sixty (60) days after the date of service of this order, and at such other times as the Federal Trade Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order.

VIII.

This order will terminate twenty (20) years from the date of its issuance, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of:

A. Any Part in this order that terminates in less than twenty (20) years;
 
B. This order's application to any respondent that is not named as a defendant in such complaint; and
 
C. This order if such complaint is filed after the order has terminated pursuant to this Part.

Provided further, that if such complaint is dismissed or a federal court rules that the respondent did not violate any provision of the order, and the dismissal or ruling is either not appealed or upheld on appeal, then the order will terminate according to this Part as though the complaint had never been filed, except that the order will not terminate between the date such complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date such dismissal or ruling is upheld on appeal.

Signed this day of , 199

APPLE COMPUTER, INC.

By:

SINA TAMADDON
Senior Vice President, Worldwide Service and Support

_______________________
BARRY J. CUTLER, ESQ.
Baker & Hostetler LLP
Washington Square, Suite 1100
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5304
Counsel for Respondent

MATTHEW D. GOLD, ESQ.
LINDA K. BADGER, ESQ.
Counsel for the Federal Trade Commission

APPROVED:

JEFFREY KLURFELD
Regional Director
San Francisco Regional Office