New York Supreme Court cracks down on company’s deceptive business practices

Dell committed consumer fraud, said a New York state supreme court on Tuesday, by luring customers in with no-interest loans, and sticking them with high interest loans instead – sometimes at interest rates higher than 20%.

Dell’s actions were a “bait and switch that left thousands of people paying for essentially no service at all” said New York attorney general Andrew M. Cuomo. “We have won an important victory that will force Dell to live up to its responsibilities and pay back its customers for profits that were pocketed but not deserved.”

“This decision sends an important message that all corporations will be held accountable for the promises they make to consumers,” he said.

N.Y. State Supreme Court Justice Joseph C. Teresi found that Dell and its division, Dell Financial Services – which is a joint venture between Dell and CIT Bank – committed a litany of wrongs: fraud, false advertising, as well as abusive debt collection and deceptive business practices. Court findings indicate that Dell used no-interest and no-payment financing offers to entice customers to purchase a computer, and then denied the majority of loan applications, sticking customers with a high-interest loan instead. Further, Dell frequently billed customers for purchases on unauthorized accounts, cancelled orders, or returned products – and then harassed the same customers with abusive collection practices.

A Dell representative, speaking in an e-mailed statement to InformationWeek, said that the company is undecided on whether or not it will attempt to appeal the ruling. Dell, however, feels that only a few customers were affected; when the dust eventually settles, the company said that it is confident that the courts would soften their stance.

“We don't agree with this decision and will be defending our position vigorously,” said the representative. “Our goal has been, and continues to be, to provide the best customer experience possible.”

Commenters on the InformationWeek article reported being hit with interest rates as high as 30 percent.

Dell, which recently has been attempting to rebuild its company image in light of losing title of largest computer manufacturer to Hewlett-Packard, claims to have placed a special emphasis on rebuilding its fallen customer service reputation. The New York state ruling will likely be another black eye for company founder Michael Dell, who recently returned as Dell’s CEO after a three-year hiatus. Direct2Dell, the company’s official blog about its products and services, so far remains silent with regards to the ruling.

"Well, we didn't have anyone in line that got shot waiting for our system." -- Nintendo of America Vice President Perrin Kaplan
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