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Dell Sued By N.Y. Attorney General

5/16/2007 02:53:00 PM Eastern

UPDATE! New York — Dell came under fire yesterday from the New York State Attorney General’s office, which filed a suit claiming the computer vendor has used deceptive business practices.

The suit, filed in Albany County Supreme Court by Andrew M. Cuomo’s office, accuses Dell and its customer-financing affiliate Dell Financial Services (DFS), a joint venture between the computer manufacturer and CIT Bank, of taking advantage of customers by using intentionally misleading financing promotions, by failing to provide adequate technical support services and of a variety of other deceptive business practices.

The attorney general’s deputy press secretary told TWICE the office had received more than 700 complaints from consumers before launching the suit.

“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,” said Cuomo in a release.”

Dell was not immediately available for comment.

Cuomo is alleging that Dell did not live up to technical-support obligations stipulated in their warranty or service contracts. He accuses the computer manufacturer of:

  • repeatedly failing to provide timely onsite repair to customers who purchased service contracts that promise onsite and expedited service;

  • pressuring consumers, including those who purchased service contracts promising onsite repair, to open up their computers and attempt to fix hardware components themselves;

  • discouraging customers from seeking technical support because customers who called the company’s toll free number were “subjected to long wait times, repeated transfers and frequent disconnections;” and

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

Beyond the allegations of faulty technical support, Cuomo is also using the suit to accuse the company of financial wrongdoing via what he calls a bait-and-switch scheme. Cuomo alleges that Dell attracted customers with no interest and/or no payment financing promotions but then failed to adequately inform the vast majority of consumers who were later denied the chance to take advantage of such promotions of their ineligibility, leaving many to unwittingly finance their purchase at high interest rates.

Furthermore, Cuomo is alleging that DFS incorrectly billed customers on orders that had been cancelled or returned or on accounts which they had never authorized Dell to open. He accuses DFS of continually harassing these customers with “illegal billing and collection activity.” The suit alleges that even though “many consumers repeatedly contacted Dell and/or DFS to advise them of the errors, that DFS did not suspend its collection activity and that Dell failed to expeditiously credit consumer’s accounts, even after assuring customers it would do so.” Cuomo claims that this alleged failure to act has led consumers to be subjected to “harassing collection calls for months on end” and to have had their credit ratings harmed.

According to a release, the attorney general’s office has filed the suit seeking to require that the two companies “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.”

The attorney general’s deputy press secretary told TWICE that the office has entered a dialogue with other states since the suit became public. She said that it was too early to provide any details but that these other states might consider joining Cuomo’s campaign in the future.

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