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Dell Found Guilty of Deceptive Business Practices

Dell Found Guilty of Fraud, False Advertising, Deceptive Business Practices and Abusive Debt Collection Practices

Some of Dell’s service chickens have come home to roost.

A New York State Supreme Court judge Tuesday found Dell and Dell Financial Services (DFS) guilty of fraud, false advertising, deceptive business practices and abusive debt collection practices.

It will take further hearings for the court to determine how much restitution Dell will have to pay its customers and what fine the state will impose.

According to a statement issued by New York Attorney General Andrew Cuomo, whose office sued Dell a year ago, “For too long at Dell the promise of customer service was a bait and switch that left thousands of people paying for essentially no service at all.”

Dell said in a statement that “We don’t agree with this decision and will be defending our position vigorously. Our goal has been and continues to be to provide the best customer experience possible. We are confident that when the proceedings are finally complete, the court will determine that only a small number of customers have been affected.”

Cuomo said when he sued that he had gotten upwards of 700 complaints.

Judge Joseph Teresi found that “Dell has engaged in repeated misleading, deceptive and unlawful business conduct, including false and deceptive advertising of financing promotions and the terms of warranties, fraudulent, misleading and deceptive practices in credit financing and failure to provide warranty service and rebates.”

According to the decision, Dell didn’t provide consumers with the technical support they were entitled to under their warranty or the service contract they bought promising timely onsite service; pressured consumers, including those with service contracts promising “onsite” repair, to tinker with the hardware themselves; discouraged consumers from seeking technical support – those who called Dell’s toll free number were subject to long waits, repeated transfers and frequent disconnections – and failed to pay promised rebates.

The judge concluded that Dell lured consumers to purchase its products with ads that offered attractive “no interest” or “no payment” financing promotions, but denied most people these terms even when they had good credit scores.

In a classic bait and switch scheme, DFS instead offered them financing at high interest rates, often exceeding 20%, without clearly informing them that they had not qualified for the promotional terms.

The decision also says that DFS incorrectly billed consumers on cancelled orders, returned merchandise, or accounts they didn’t authorize Dell to open, and then harassed them for months with illegal billing and collection activity damaging their credit ratings.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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