Dell Found Guilty Of Fraud In New York

The Office of the Attorney General yesterday won what it’s describing as a “groundbreaking” lawsuit against Dell and its affiliate, Dell Financial Services.

In a case AG Andrew M. Cuomo filed last year on behalf of the state, Justice Joseph C. Teresi ruled that Dell and DFS had engaged in fraud, false advertising, deceptive business practices, and abusive debt collection practices.

According to the ruling, Dell failed to provide consumers with the tech support they were entitled to under their warranty or service contract by repeatedly failing to provide timely onsite repairs to those who purchased service contracts promising that. Dell was also found guilty of pressuring consumers (including those entitled to onsite repair) into attempting to repair the computers themselves.

Having heard all the horror stories about support lines (some of you have no doubt been on the wrong end of this) it’s not surprising to hear that Dell was also found guilty of discouraging consumers from seeking technical support. Apparently those who called Dell’s toll free number were subjected to long wait times, repeated transfers, and frequent disconnections.

Justice Teresi said that Dell lured consumers into purchasing its products with advertisements that offered appealing “no interest” or “no payment” promotions. However, many customers, even those with very good credit scores, were denied these deals and instead offered financing at higher interest rates. He also said that often, Dell and DFS failed to clearly inform these customers that they had not in fact qualified for the promotion.

But wait, there’s more. The decision also held that DFS incorrectly billed customers on cancelled orders, returned goods, or accounts they did not authorize Dell to open. DFS then continually harassed them with illegal billing and collection activity. While many people repeatedly contacted the company to advise them of the errors, DFS did not suspend its collection activity and Dell failed to expeditiously credit consumers’ accounts, even though it assured customers it would do so. As a result of these practices, many customers have had their credit ratings harmed.

The Court will hold further proceedings to determine how much restitution Dell will have to pay to its customers and the amount of profits Dell unlawfully earned that must be forfeited to the State.