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 owner, 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.