Netgear has settled a class-action lawsuit that accused it of inflating the true data speeds of its Wi-Fi networking devices.

The company paid $700,000 to settle the case lawsuit, started in June 2004. A second lawsuit, filed in February, was voluntarily dismissed in favour of the 2004 case.

Customers who purchased Netgear wireless devices between January 1999 and this month will be eligible for a 15 percent discount on a purchase of a new wireless device under the settlement.

Netgear also agreed to change its advertising for Wi-Fi devices, saying the data speeds advertised are the maximum rate but "actual throughput will vary" depending on several factors. Netgear's website now includes a statement saying data speeds of up to 240Mbit/s may vary. Netgear will also to donate $25,000 worth of its equipment to charity.

A Netgear representative wasn't immediately available for comment, but the company disputes the claims made in the two lawsuits and does not "admit any liability whatsoever".

"Netgear has agreed to enter into this agreement to avoid the further expense, inconvenience, and distraction of burdensome and protracted litigation, and to be completely free of any further claim or controversy in connection with the advertising and performance of the Covered Netgear Wireless Products," the company said in a filing with the US stock exchange.