WASHINGTON -- Netgear has agreed to settle a class-action lawsuit that accused the company of inflating the data speeds of its Wi-Fi networking devices in advertising materials.
In a November 23 filing with the U.S. Securities and Exchange Commission, Netgear said it has agreed to pay $700,000 to settle a class-action lawsuit initiated in June 2004. A second lawsuit, filed in February, was voluntarily dismissed in favor of the 2004 lawsuit.
Under terms of the settlement, customers who purchased Netgear wireless devices between January 1999 and this month will be eligible for a 15 percent discount on the purchase of a new wireless device. The agreement must be approved by the Santa Clara County Superior Court in California.
A Change in Ads
Netgear, based in Santa Clara, also agreed to change its advertising for Wi-Fi devices to say that the data speeds advertised are the maximum rate but that "actual throughput will vary" depending on several factors. On Netgear's Web site today, advertising for its RangeMax 240 Wireless Router included a statement saying that data speeds of up to 240 mbps may vary.
Netgear will also to donate $25,000 worth of its equipment to charity as part of the settlement, dated November 17.
A Netgear representative wasn't immediately available for comment, but the company disputes the claims made in the two lawsuits and does not "admit any liability whatsoever," it said in the settlement agreement filed with the SEC.
"Netgear has agreed to enter into this agreement to avoid the further expense, inconvenience, and distraction of burdensome and protracted litigation, and to be completely free of any further claim or controversy in connection with the advertising and performance of the Covered Netgear Wireless Products," the company said in its SEC filing.