Palm, the handheld computer maker, has reached a settlement with the US Federal Trade Commission (FTC) over complaints that it misled consumers.

The complaints focused on Palm's claims of internet connectivity for its hand-held PCs, which the FTC described as "deceptive".

Under the settlement, Palm's adverts must tell buyers "clearly and conspicuously" that they need to purchase additional devices to surf the net with its hand-helds, the FTC said.

"We believe we have fully disclosed those requirements, but we are happy to make those disclosures in larger type and more explicit language", said Palm spokeswoman Marlene Somsak.

Palm slapped down

In its complaint, the FTC said Palm had claimed its handheld devices could access the Internet and run Microsoft Word and Excel programs.

It took the view this was misleading because the handheld PCs required separate modems or software to perform such functions, the FTC said.

Furthermore, the company had also failed to disclose that users would need to sign up to Palm's internet service at extra cost to receive wireless access, the FTC said.

In future, Palm must also spell out that its wireless internet service does not reach the whole of the US.

It faces penalties of up to $11,000 for every infringement of the settlement agreement.