If you're in the market to buy your first personal computer, or ready to upgrade yourcurrent PC to a new model, you've undoubtedly noticed the steady stream of offers for "free," or "nearly free" computer systems.
For example: Monday's edition of the Wall Street Journal carried a large display ad from Value America offering an IBM Aptiva system (380MHz/64MB/8GB/15" monitor/color printer) for an eye catching $199, after rebates. Because this particular IBM system was crafted specifically for wholesale, an exact copy is not available through traditional retail channels. However, if it were, it would carry a price tag of approximately $800.
So what's the catch?
Well, in this case, it's a three-year obligation to CompuServe's 2000 Premier Internet service, at a cost of $21.95 a month for 36 months. When that contractually obligated expense is added to the tab, the price tag for the $199 system, rises to $989.20.
And don't forget to add $78 for shipping and handling, which puts the minimum cost of system at $1,067.20.
Unfortunately, for some consumers the costs would not stop there. The laundry list of potential future expenses include things such as cancellation fees, long distance Internet connection charges and various telephone surcharges.
Debra Martinez, chairwoman of the state Consumer Protection Board, said it's critical that consumers look deeper than the attractive price tag in these advertisements.
"Read, read, read, read the small print, I can't emphasize that enough," Martinez said. "Just like there's no such thing as a free lunch, there's no such thing as a free, or nearly free PC. Your going to pay for it one way or another."
One of the biggest potential added expenses is cancellation fees. In the case of the Value America offer, if the purchaser decides to part ways with CompuServe before the end of the three-year Internet service provider contract, that decision could add as much as $450 more to the tab.
This is a penalty situation that is not exclusive to Value America, CompuServe or IBM. A number of computer makers are joining forces with Internet service providers to craft similar deals, with similar cancellation clauses.
Internet novices generally appreciate being linked to a full-service provider, like CompuServe or America Online, which beef up their connection with lots of user-friendly features. But a seasoned surfer who doesn't require tutoring, or wants to avoid the barrage of advertisements that come with the big name providers, would be happier with a stripped down Internet hook up with a price tag in the $9 to $13 a month range.
In the Value America deal, a consumer who decides to switch to an alternative Internet service provider in the first 12 months of the contract would face a $50 cancellation fee, and would be required to pay back the $400 rebate CompuServe paid to sweeten the original deal.
Cancellation in the second and third year of the contract would also result in a $50 cancellation fee, plus repayment of $300 and $200 in rebates, respectively.
"The cancellation penalties should be a major consideration for anyone thinking about entering into one of these contracts. With computer and Internet technology changing so rapidly, and costs generally coming down, you might end up frustrated by being locked into a particular service," Martinez added.
A local computer salesperson, who asked not to be identified, said another pitfall of the "nearly free," mail-order PC is the lack of technical support.
"One of the reasons the price is so low is that the manufacturer isn't backing it with any ongoing service to the customer," he said.
The computer seller said he's had more than a few consumers come to his Amherst store looking for help when they run into difficulties with hardware and software.
"I tell them, 'Why don't you ask your mailman? He's the one who brought you the computer.' This is especially frustrating for new users who require a certain amount of hand holding, and you don't usually get that when you buy mailorder," he said.
A few free or cheap PC offers are tied to advertising or transmission of personal information that will be used for marketing purposes. Like those linked to Internet service contracts, these arrangements rely on willing consumers to agree to have ads flashed across their screen, or to have their web surfing habits chronicled, in exchange for PC use.
"It might not sound like an inconvenience or invasion of privacy in the abstract, but you might not feel that way after a year or so having part of your computer screen taken up by ads, or having your Internet habits monitored," Martinez said.
Some other problems reported by consumers are delays getting rebate checks after they've made their payments, signed contracts and received their systems. In some cases, PC-buyers wind up with refurbished computers or accessories, when they thought they would get a brand new gear.
The potential pitfalls of "free PC" deals are so big, they've drawn the attention on consumer advocates and a number a state attorneys general across the United States.
New York State Attorney General Eliot Spitzer has posted a consumer warning on the office website (www.oag.state.ny.us). "The promise of a free computer has drawn many consumers into contracts that are not necessarily a great deal," Spitzer cautioned. "Unfortunately, you could get stuck with a costly contract which provides services you no longer want."
Consumers who are having problems related to a free PC contract can contact the AG's office at (800) 771-7755 for assistance.
The Buffalo office of the Better Business Bureau is equally concerned about sour PC deals, according to spokesman David Lukow.
"There are some legitimate offers out there, but like with any transaction, if it sounds too good to be true, it probably is," Lukow said.