Netgear To Pay $700K to Settle Speed Claims

Netgear has agreed to pay $700,000 (and offer some customers a 15 percent discount) to settle a class action suit over bandwidth claims in ads for its Wi-Fi products.

In a filing with the Securities and Exchange Commission, Netgear has outlined the terms of a settlement to a class action suit filed against the company, alleging the company advertised false bandwidth claims for some of its Wi-Fi products. Although the company admits no wrongdoing, Netgear has agreed to pay $700,000 and offer customers who purchased Netgear wireless products between January 1999 and November 2005 a 15 percent discount on new wireless devices. In addition, the company must change its advertising to indicate promoted bandwidths offered by wireless produces are theoretical maximums, and include the following language on its advertising:

Maximum wireless signal rate derived from IEEE Standard 802.11 specifications. Actual data throughput will vary. Network conditions and environmental factors, including volume of network traffic, building materials and construction, and network overhead, lower actual data throughput rate.

In basic terms, the dispute stems from the disparity between the bandwidths offered by Wi-Fi wireless networking technology specifications (such as 802.11b and 802.11g) and the real world performance of those same technologies, which are often ten times less than the theoretical specs. (The same is true for wired networking technologies such as Ethernet.) Most companies offering Wi-Fi products cite the specified bandwidths of the technology they implement, but note that real world performance is substantially lower. But not Netgear: their advertising and product descriptions purported to offer the full theoretical bandwidths with no caveats whatsoever.

Netgear is already updating online advertising for some of its wireless offerings, including its RangeMax 240 products. According to Netgear’s filing, “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 settlement agreement must still be approved by the Santa Clara County Superior Court in California.

In additional Netgear will donate $25,000 worth of its equipment to a charity chosen by the company.