The US Federal Trade Commission and Palm has begun discussing a settlement deal prohibiting Palm from making disingenuous claims about its products.

This follows the FTC charging Palm with having misrepresented the Internet access and email capabilities of its handheld devices in its marketing materials. The agreement requires Palm to be "clear and conspicuous" when making claims about the ability of its handhelds to perform functions that require users to purchase additional products or services, the FTC said.

The agency charged Palm with representing many of its personal digital assistants (PDAs) as though they came with built-in Internet and email access. In fact, users need to purchase add-on services and products, like modems, to use these functions. The FTC also alleged that claims Palm made concerning the business functions of its PDAs, such as viewing Microsoft Word and Excel documents, were "deceptive," as additional software had to be purchased to do this.

The agency pointed out that the settlement does not constitute an admission of wrongdoing on Palm's part, however.

Palm spokeswoman Marlene Somsak said that, although the company does not feel that it did anything wrong, it does understand the FTC's perspective. Palm has agreed to be more explicit about the capabilities of its products and to use a larger font in its marketing materials when discussing the additional products and services required to obtain Internet and e-mail functions, she said.

Once the deal is reached, Palm will be charged an $11,000 penalty for each violation of the agreement.