New York Sues Dell For Deception

Suit Alleges Misleading Financial Terms, Rebate Offers, Hard-To-Get Tech Support

(AP)  New York Attorney General Andrew Cuomo on Wednesday accused Dell Inc. and its financial services affiliate of "bait and switch" advertising and failing to deliver on promised customer service.

Round Rock, Texas-based Dell lured customers with zero percent financing, then switched them to a higher rate without their knowledge at the time of purchase, according to the lawsuit.

Cuomo announced details of a lawsuit filed a day earlier in the New York Supreme Court, claiming that Dell and Dell Financial Services LP engaged in fraud, false advertising and deceptive business practices.

Dell denied those charges in a written statement from spokesman Bob Pearson.

"We are confident that our practices will be found to be fair and appropriate," Pearson said. "While even one dissatisfied customer is too many, the allegations in the AG's filing are based upon a small fraction of Dell's consumer transactions in New York."

Cuomo said his office had "received an unprecedented number of complaints against Dell, approximately 700 and they keep coming."

"We want fairness," Cuomo said Wednesday. "Either provide the customer service packages that you sell or don't sell the packages."

While Dell frequently advertises zero percent financing plans for computer purchases, the attorney general said that as many of 85 percent of those who applied did not receive that rate.

The lawsuit also claims that Dell sold onsite computer repair plans but failed to deliver, at times requiring customers to disassemble their own computers.

The lawsuit seeks an order requiring Dell to pay unspecified damages to affected customers and the state is also seeking penalties and costs.

In an unrelated probe, the Securities and Exchange Commission and Dell's own audit committee have been investigating the company's accounting practices.

In recent months, Dell has seen a management shake-up that included the departure of several top executives — including Chief Executive Officer Kevin Rollins and Chief Financial Officer Jim Schneider — and the return of Michael Dell as CEO.

With Dell at the helm, the company has been trying to orchestrate a turnaround plan to improve customer service and combat competitors who have eaten into Dell's market share.

[matisyahu3]

This attorney general is on the biggest power trip I have ever seen. So he busts colleges for the loan kickbacks, which is good because I go to one of the schools, so that was a good thing. Then he went after Verizon because his name was in the media and he got some power, NOW he is going after Dell. I'm all for protecting the little guy from big corporations but this guy is just telling me that he is a power tripping a hole.

[matisyahu3]

This attorney general is on the biggest power trip I have ever seen. So he busts colleges for the loan kickbacks, which is good because I go to one of the schools, so that was a good thing. Then he went after Verizon because his name was in the media and he got some power, NOW he is going after Dell. I'm all for protecting the little guy from big corporations but this guy is just telling me that he is a power tripping a hole.

[hawksprings]

The Attorney Generals of New York are like street toughs demanding payment for protection. They spend their time trolling for another industry or business to shake down using the power of the government.

[panton41-2009]

I'll admit my experience with Dell tech support was OK, but only OK, not great. Seeing how they wanted to challenge physical damage to my computer that I could have photographed and a friend who was on tech support for four hours and they couldn't resolve a VERY obvious hardware issue, I could see the argument of not honoring warranties.

The rebate problem, in a VERY special case of not wanting Windows, was documented in a recent BBC News article favorably in the story's case, but with a warning of it being the vast exception, not the rule. Add to that the crapware installed with no recourse but to pay for, "click wrap" agreements over every installed program to even boot your computer and no real choice but their's on a whole list of utilities there is a valid rebate issue. Let's not forget the most likely case of simply a mail-in rebate not being honored.

And their credit service might as well be a credit card, interest rates starting at 18 percent for an often multi-thousand dollar system are Bad.

[klingon69]

Whereas I agree it seems that they are just "beating them up for their lunch money" with their tactics, I personally hate DELL. Everytime I have worked with a Dell desktop it has sucked. We installed a Dell server here at my work to replace the older IBM unit, when we turned the Dell server on and rebooted the system, it ran about 1/3 slower. The Dell desktops we use on our cashlanes crash almost daily.

[samthetvcat]

This isn't just a frivolous lawsuit brought by a disgruntled consumer looking to cash in against a corporate giant, this one's being brought by the NY Attorney General on behalf of the state . . . and I too have been met with aggression rather than help at the Dell service call center. I got what I wanted out of them eventually, but geez it sounds like even when you fight back and win they really don't take your complaints to heart and address them - let's make this a class action!

[hazelknows]

They need a turnaround plan to improve customer service, I know move your technical support back to the USA, "making it difficult for them to obtain technical support", thats unless you speak their local language of India or perhaps Pakistan. Computers are their own language and nothing more frustrating than needing help and the one you rely on, you can't understand.

[jjreding-2009]

I personally have had nothing but GOOD dealings with Dell, from getting my hard-drive replaced promptly to having not one but two MP3 players replaced. HOWEVER, the one complaint I DO have is that when they say 'let us build one for you', it appears to be misleading because I DID call in to try to have a custom system built and wound up buying a new hard drive and memory instead (which, incidentally, cost LESS than if I had completely replaced my computer with what I wanted to do originally).

[drinuk]

Dell service in Europe is also pathetic, calling India is a joke and costs a fortune whilst time is wasted trying to understand them. Cutting out the middleman may well cut Dell market share, they are becoming a dirty word here in the UK and folks are going back to the stores.

[consciousnes]

I too have had good experience with Dell's delivery, but their Finance division and the information about their finance charges have not been up-front. Dell needs to get their Finance division under control or it will ruin them.

[diplomacy3]

I have been buying Dell computers since 2003 for my business and have had no problem whatsoever. The delivery is on time and the price quoted are comparatively the lowest. I will always buy Dell. I have no problem with that. DELL IS GREAT!

[diplomacy3]

I think the Attorney General should go after the Ebay stores. Some stores have misleading ad to cheat buyers such as "GPS NAVIGATION SYSTEM PORTABLE & CAR WHOLESALE NEW LIST". They show a picture of GPS and not the LIST.

[complexities]

Dell is really hurting financially, and it appears they are trying to make up for their losses by cheating their customers. This is never a good way to go in the long run, but it appears they're only thinking of the here and now and not how this will ultimately destroy their reputation.

I don't think Dell was prepared for what's happened. They, as well as most PC companies, have always tried to claim they were less expensive than Apple's computers. But now that Apple's using Intel processors, the comparison can be made directly between the PCs and Macs, and it's been discovered that Dell's computers are as much as twice the price of a Mac; even worse, when comparing the specs side by side, not only are the Dell computer's most expensive, but their specs are lower than the Mac's. Dell can no longer rely on the untrue myth that they are a better value as it is now possible to make a direct comparison, spec by spec, processor included, between Dell and Apple, and Dell has been found out to be very overpriced with lower specs.

It seemed for a long while that PC companies had hoped Microsoft's Vista would create new sales energy, but even that has failed with so many PC users rejecting Vista.

Rather than *** their customers, Dell needs to stop being just one more PC copy-cat and do some real work of innovating new things that the customers truly want. Cheating their customers is not the right way to go.

Dell is hurting and scrambling, and it shows.

[complexities]

I'm not sure why one of my words in my previous comment was censored as I never used profanity in my comment.

To clarify, the word in my earlier comment that CBS News replaced with "***" was "ch-eat" (without the dash, of course). Apparently, "cheating" is allowed while "ch-eat" is not. ???

I wanted to make it clear that I had not used any profanity against Dell in my comment as I find profanity needless and very unbecoming, and I'm not very happy with CBS News making my comment appears as if I had used profanity.

[cornflower3]

my problem with dell is i couldn't use my rebate because it had to be printed out and i didn't buy a printer. they wouldn't listen and i had to settle for less than half of what i could have gotten by a rebate and it was deducted on my bill. with the high rate of interest, it didn't make any diference.

[ihatedell-2009]

I say lets make Dell pay this time everyone!
Enough with the aggravating word wars with 'Doug', the son of India....waiting on line for hours only to be transfered for the 100th time to yet another useless 'technician'...or even worse hung up on!!!! Arrrgghhhh!!!!!
The Dell customer service is inexistant and lame; the computers are as reliable as russian rulette!
Being robbed at gun point is a much more pleasant experince than the empty feeling of desperation watching your brand new lap top hard drive crash 2 min after turning it on...and thousands of dollars latter!

DOWN WITH DELL !!!!

[drinuk]

Andrew Cuomo would serve the public better if he were to fully investigate the "Phone-In" situation with regard to American Idol. Millions of Dollars are being spent by people he should be representing and who may as well throw their money into the Hudson. Are the Producers making the decisions or are the public ? Just like Dell these companies are all trying to scam us for a quick buck, however Dell pales into the mist compared to the money made from these very dubious phone-ins. Time to take a look Mr Cuomo !

[gahwa-2009]

The bases of this complaint is exactly what happened to me. I bought a Dell thinking I would get the zero financing, since I had a credit score of high 700. Turns out I did not "qualify" for their zero financing and would not give a reason why. I just turned around an paid cash for the full price, but I will never buy from Dell again.