AST Agrees to Clarify Equipment Labels

AST Research Inc. will no longer sell used computers labeled as new units as part of an agreement reached Thursday with regulators in 21 states, the California attorney general’s office said.

According to the agreement, AST will clearly mark boxes containing hardware that’s been returned by consumers and reconditioned before being resold. The Irvine-based computer manufacturer also paid $90,000 to help cover costs of the investigation but admitted no wrongdoing.

AST officials were not immediately available to comment on the agreement. But Al Shelden, a supervising deputy attorney general in San Diego, described the settlement as part of an investigation into how computers are sold in the U.S.

“This is the third in a series of settlements involving a varying number of states and computer manufacturers,” Shelden said. “The earlier agreements involving Compaq and Packard Bell also dealt with the issue of manufacturers reselling computers that already had been sold to end users who’d returned them.”

Shelden wasn’t able to say how many of the computers had been sold by AST in recent years. But, according to the Massachusetts attorney general, the computers that AST sold as new machines had been used for less than 10 hours.

As part of the agreement, AST promised to clearly mark returned computers as used equipment. Compaq and Packard Bell earlier agreed to clearly label used equipment when it is resold.

The practice of selling used equipment as new is “fairly rare among retailers,” said Michael Shames, executive director of UCAN, a San Diego-based consumer group. “But the incentive for manufacturers is that used equipment typically is marked down 20% to 50% for sale.”

Shames said it’s difficult for consumers to tell that a computer has been used. “Unlike a car, there’s no odometer,” he said. “And it’s really impossible for manufacturers to tell what’s been done to these computers that get returned by consumers.”

Other states involved in the settlement are Arizona, Arkansas, Delaware, Florida, Illinois, Indiana, Kentucky, Louisiana, Michigan, Missouri, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Texas, Vermont and West Virginia.

AST’s shares fell by 6.3 cents Thursday to $4.75 in Nasdaq trading.

Bloomberg News contributed to this report.