iPhone 4 antenna woes prompt Apple to dump return fee

Move to mollify dissatisfied customers by ditching 10% restocking fee also aimed at quelling lawsuits

Apple has dropped the usual restocking fee for iPhone customers who want to return their smartphones, the company confirmed on Friday.

In a statement posted earlier today to its Web site that blamed reception problems on a flawed signal strength indicator, Apple said that buyers could return their iPhone for "a full refund" within 30 days of the purchase if they weren't satisfied.

That's a change from the company's normal policy, which demands a 10% restocking fee for returned iPhones. According to the company's Web site, Apple typically charges $19.90 for a returned 16GB iPhone 4 model, and $29.90 for a 32GB device.

An AppleCare support representative who gave her name as "Erica" confirmed that the restocking fee had been ditched.

The restocking fee is also central to at least one of several lawsuits that consumers have filed this week against Apple, alleging that the company shipped defective iPhone 4s to customers.

In a lawsuit filed Wednesday in federal court, a pair of Maryland residents claimed that the iPhone 4 sported a defective antenna design that drops calls and can't hold a strong signal.

Kevin McCaffrey and Linda Wrinn accused Apple of knowingly selling a defective product, adding that they "are unable to return the phone without incurring a substantial restocking fee."

McCaffrey and Wrinn have asked that their lawsuit be granted class-action status, a move that if awarded would allow any U.S. iPhone 4 owner to join the case.

Complaints about call and data signal-strength problems in the new iPhone 4 surfaced within hours of the smartphone's launch last week. By the next day, Apple was acknowledging that holding the iPhone 4 can diminish the signal but offered only generic advice, telling users to "avoid gripping it in the lower left corner" or "use one of the many available cases."

Today, Apple laid the blame for the complaints on a faulty algorithm that over-reports signal strength to iPhone owners.

"We were stunned to find that the formula we use to calculate how many bars of signal strength to display is totally wrong," Apple said in the statement. "Our formula, in many instances, mistakenly displays 2 more bars than it should for a given signal strength."

Apple added that the inaccuracy had gone undetected for more than three years, and has been present in all models going back to the original iPhone that launched in June 2007.

The company will issue a software update "within a few weeks" with a new strength indicator algorithm obtained from its U.S. carrier partner AT&T.

The over-reporting of signal strength is the root of user's gripes about quickly-plummeting reception when they hold the iPhone 4, Apple claimed. "Users observing a drop of several bars when they grip their iPhone in a certain way are most likely in an area with very weak signal strength, but they don't know it because we are erroneously displaying 4 or 5 bars," Apple said.

"Their big drop in bars is because their high bars were never real in the first place," the company said.

Most iPhone 4 owners commenting on Apple's own support forum denounced the explanation, with one user calling it "hooey" and "bogus."

iPhone owners can return their phones to any Apple retail store or to the company's online store for a full refund within 30 days of their purchase. For online customers, the 30-day calendar starts flipping when the iPhone is shipped, not when they receive it.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@ix.netcom.com.

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