Dell to Pay New York $4 Million to Resolve Fraud Charges

Dell will be paying New York State $4 million to resolve charges the company engages in fraud, deceptive practices, and false advertising.

New York State Attorney General Andrew Cuomo has announced that computer maker Dell will be paying some $4 million to resolve charged the company engaged in false advertising, deceptive practices, and outright fraud. In addition to paying the penalties, Dell will also have to change its marketing and financing practices.

“Today’s announcement is the final step in ensuring New Yorkers harmed by Dell’s deceptive and illegal business practices are fully compensated,” said Cuomo, in a statement. “Going forward, this deal means that Dell will have to clearly and fully disclose the terms and conditions of their products and services, to avoid this kind of fraud at the consumer’s expense.”

The case goes back to 2007 when Cuomo dues Dell, alleging the company engaged in bait-and-switch advertising tactics to sell its computers, and failed to deliver “expedited” services to customers. In 2008, a judge ruled that Dell had engaged in deceptive advertising by luring customers with promises of “no interest” and “no payment” financing, then rejected the vast majority of applicants—even those with solid credit scores—and instead offered financing with interest rates as high as 30 percent.

As part of the mandated changes, Dell advertisements will have to indicate the estimated percentage of customers who will actually qualify for the promoted financing offers. Consumers purchasing expedited customer service agreements will also have to be informed before paying any money that they might be required to engage in length diagnostic sessions over the phone with Dell customer service reps, and that might include opening up the computer to fiddle with components themselves.