Judge Finds Dell Engaged in Deception

A New York judge has found that Dell engaged in deceptive advertising in promotional credit and warranty offers...and will have to pay restitution.

Last year, New York attorney general Andrew Cuomo sued Dell Computer, alleging the company engaged in “bait-and-switch” advertising in its credit and financing advertising, and repeatedly failed to provide customers with “expedited” customer service for which they had paid. Today, New York judge Joseph Teresi agreed, ruling (PDF) the company and its affiliate Dell Financial Services engaged in fraud, false advertising, and deceptive business practices, along with abusive debt collection.

Teresi ruled that Dell lured customers towards its products with advertisement that promised “no payment” or “no interest” financing; however, the vast majority of applicants—even those with strong credit scores—were denied the advertised deals and instead offered financing with interest rates ranging as high as 30 percent. Teresi also found Dell tried to keep customers from using technical support and warranty service, failed to live up to onsite repair promises, pressured customers to repair computers themselves, failed to send rebates, and discouraged customers from seeking support by subjecting them to long hold times, frequent transfers, and disconnects.

“Dell has engaged in repeated misleading, deceptive, and unlawful business conduct, including false and deceptive advertising of financing promotions and the terms of warranties, fraudulent, misleading and deceptive practices in credit financing and failure to provide warranty service and rebates,” Teresi wrote in his decision.

Teresi will hold additional proceedings to determine the amount of restitution Dell will have to pay to New York customers, as well as penalties. In the meantime, he has ordered that Dell disclose the number of applicants who are likely to qualify for promotional financing.

Dell has not yet commented on the ruling, but had previously indicated it believed the complaints represented a small fraction of New York customers, and that overall its business practices were fair.

The New York attorney general’s office had 700 complaints about Dell’s practices when it filed the suit in 2007; according to spokesperson John MIlgram, it has received more than 1,000 more since then.