November 28, 2005, 10:33 AM — Netgear Inc. has agreed to settle a class-action lawsuit accusing the company of inflating the data speeds of its Wi-Fi networking devices in advertising materials.
Netgear, in a Nov. 23 filing with the U.S. Securities and Exchange Commission (SEC), said it has agreed to pay US$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.
Customers who purchased Netgear wireless devices between January 1999 and this month will be eligible for a 15 percent discount on a purchase of a new wireless device under terms of the settlement. The agreement must be approved by the Santa Clara County Superior Court in California.
Netgear, based in Santa Clara, also agreed to change its advertising for Wi-Fi devices, saying the data speeds advertised are the maximum rate but "actual throughput will vary" depending on several factors. On Netgear's Web site Monday, advertising for its RangeMax 240 Wireless Router included a statement saying data speeds of up to 240M bps (bits per second) may vary.
Netgear will also to donate $25,000 worth of its equipment to charity as part of the settlement, dated Nov. 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 the SEC filing.