Dell sued for fraud: Is your biz affected?
September 22, 2009 by Valerie HelmbreckPosted in: In this week's e-newsletter, Latest News & Views, Regulations & Compliance
Dell customers in New York who claimed the company defrauded them recently learned they could be eligible for restitution. Were consumers elsewhere in the country also victims?
New York’s Attorney General Andrew M. Cuomo recently announced that Dell and its subsidiary, Dell Financial Services (DFS), are going to pay the Attorney General’s Office $4 million in restitution, penalties and court costs to resolve charges of fraudulent and deceptive business practices that scammed consumers across New York State.
The company will also compensate victims its business practices. To get the money, folks will have to prove they’ve bought a Dell in New York in the past several years and fill out a form with the AG’s office. Forms are due by December 15, 2009.
The settlement follows a decision of the New York Supreme Court, Albany County, which went along with Attorney General Cuomo’s claims that Dell engaged in fraud, false advertising, deceptive business practices, and abusive debt collection practices.
The court ruled that Dell engaged in bait and switch advertising with respect to:
- its “no interest” financing promotion and misleading consumers to believe they’d qualified for it
- failing to adequately disclose the terms of its “next day” service contracts, and
- failing to provide consumers with warranty service and promised rebates.
Along with the $4 million in restitution, penalties and fees, the settlement requires Dell to make sweeping changes to its advertising, sales and financing practices.
Among other things, Dell will be required to advise customers before they purchase an “at-home” or “on-site” service contract that they may be required to engage in diagnostic activity over the telephone that includes the customers themselves opening computers to access internal components.
The settlement also requires Dell to disclose in its advertisements the estimated percentage of consumers who will actually qualify for promotional financing.
According to the Court’s decision upholding the Attorney General’s lawsuit, Dell deprived customersof the technical support to which they were entitled under their warranty or service contract by:
- Repeatedly failing to provide timely on-site repair to consumers who purchased service contracts promising “on site” and expedited service;
- Pressuring consumers, including those who purchased service contracts promising “on site” repair, to remove the external cover of their computer and remove, reinstall, and manipulate hardware components; and
- 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.
It seems the consumers will get the last word in this sorry scenario. Any New York resident harmed by Dell’s deceptive conduct can file a claim for restitution using special claim forms that are posted on the Attorney General’s website.
The question remains, however: If Dell’s New York customers are entitled to restitution, are businesses and consumers located in other areas?
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Tags: fraud, lawsuit, maintenance
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