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New York Sues Dell on Consumer Fraud Charges

Dell Accused of False Advertising, Failure to Provide Services

May 17, 2007

Dell Computers • Advertising • Credit Card Fraud • Dell Finance • "No-Interest" Offers • Rebates • Restocking Fee • Sales Practices • "Surprise" Loans Service • Customer Service • Tech Support • 30-Day Return Policy • Warranty • Extended Warranty Products • Laptops • Printers • Plasma TV Customers • Deployed Military • Small Business Customers • Dell Defenders --- News • Dell To Pay New York $4 Million In Fraud Charges Settlement • Dell Flubs Online Prices • Dell to Pay $3.3 Million to Resolve Deceptive Practice Claims • Judge Rules Dell Deceived Consumers • Dell Closes Sales Kiosks • Wal-Mart To Sell Dell Computers • New York Sues Dell on Consumer Fraud Charges • Dell Breaks Microsoft Stranglehold • Dell Settles Class Action Over Financing Practices • Dell Recalls Notebook Computer Batteries • Chinese Consumers Sue Dell • "Exploding" Dell Laptop Destroys Truck, Imperils Outsdoorsmen • Dell Denies It Knew of Overheating Battery Problem for Years • Dell Cuts Rebate Program Amid Complaints • Seeking Sizzle, Dell Goes Alien • Dell Sales & Earnings Down, Complaints Up • Computer Vendors Charge More For Less Service • Class Action Accuses Dell of Defrauding Customers --- Recalls • Dell Recalls Notebook Computer Batteries • Dell Recalls More Notebook AC Adapters • Dell Recalls Notebook Power Adapters Analysis • Dell Wins Complaint Derby • To Dell & Back • Dell Talks Back

New York Attorney General Andrew M. Cuomo has filed suit against Dell, one of the world’s leading computer companies, and Dell Financial Services, LP (“DFS”).

“At Dell, customer service means no service at all. Dell’s consumers were intentionally misled, and they had to pay for that privilege. I hope this lawsuit sends a message to companies large and small that delivering a product is simply not enough – the promises they make must be delivered as well,” Cuomo said.

The lawsuit accuses Dell and DFS of engaging in “bait and switch” financing tactics and failing to provide their customers with adequate customer service.

It also charges Dell and DFS with perpetuating numerous other deceptive business practices relating to their technical support services, promotional financing, rebate offers, and billing and collection activity.

DFS is a joint venture between Dell and CIT Bank, which offers financing to consumers for their Dell purchases.

Poor Tech Support

According to court papers, Dell deprived consumers of the technical support to which they were entitled under their warranty or service contract by:

• Repeatedly failing to provide timely onsite repair to consumers who purchased service contracts promising “onsite” and expedited service;

• Pressuring consumers, including those who purchased service contracts promising “onsite” repair, to remove the external cover of their computer and remove, reinstall, and manipulate hardware components;

• Discouraging consumers from seeking technical support; those who called Dell’s toll free number were subjected to long wait times, repeated transfers, and frequent disconnections;

• Using defective “refurbished” parts or computers to repair or replace consumers’ equipment.

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"No Interest" Promises

The lawsuit accuses Dell of luring consumers to purchase its products with advertisements that offered attractive “no interest” and/or “no payment” financing promotions. In practice, however, the vast majority of consumers, even those with very good credit scores, were denied these deals.

In a classic “bait and switch” scheme, DFS instead offered consumers financing at high interest rates, which often exceed 20%. Dell and DFS frequently failed to clearly inform these consumers that they had not qualified for the promotional terms, leaving many to unwittingly finance their purchase at high interest rates.

The lawsuit also alleges that DFS incorrectly billed consumers on cancelled orders, returned merchandise, or accounts they did not authorize Dell to open, and then continually harassed these consumers with illegal billing and collection activity.

Although many consumers repeatedly contacted Dell and/or DFS to advise them of the errors, DFS did not suspend its collection activity and Dell failed to expeditiously credit consumers’ accounts, even after assuring consumers it would do so.

As a result, many consumers have been subjected to harassing collection calls for months on end and have had their credit ratings harmed.

In filing the lawsuit, Cuomo seeks to require Dell and DFS to pay restitution to aggrieved consumers, pay civil penalties, and adopt measures to ensure that they do not engage in deceptive, illegal, and fraudulent practices in the future.

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