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.