New York Attorney General Andrew Cuomo filed the suit yesterday, alleging that Dell lures customers with promises of low or no interest rates on financed PC purchases, then switches them to high-interest payment plans without their knowledge.
It also accuses Dell of perpetuating numerous other deceptive business practices relating to their technical support services, promotional financing, rebate offers, and billing and collection activity.
The suit claims by way of example the case of New York resident Paul Reisner, who allegedly was told he was signing up for a zero-interest payment plan, and instead found himself paying 29%, far more than if he’d simply billed the full $1,500 price tag to his credit card.
Dell, which has acknowledged poor customer service in the recent past, and has been diligently working for the last year to improve its image, has reportedly denied the claims of the lawsuit, but did not respond to a call for more detailed comment by press time yesterday.
Cuomo’s lawsuit names Dell and Dell Financial Services, its joint venture with CIT Bank, as defendants with regards to the financing allegations.
In addition to the bait and switch allegations, Cuomo’s office claims that DFS bills for cancelled or returned orders, then harasses customers to pay up for products they didn’t keep.
Many consumers have been subjected to harassing collection calls for months on end and have had their credit ratings harmed, the attorney general’s office said in a statement.
The suit also claims that Dell does not provide timely on-site support for customers who have purchased it, and that it instead pressures them into opening up their PCs and fixing hardware problems themselves or supplies defective refurbished components.
It also alleges that Dell deliberately discourages customers from using telephone tech support by keeping them on hold for long periods and then repeatedly transferring or disconnecting them.
It’s merely the latest development in what is turning out to be a mostly miserable year for Dell.
The company has yet to file its quarterly reports with the financial regulators for the last few quarters, receiving a Nasdaq delisting notice as a result, and said in late March that it found evidence of misconduct in its historical accounting.
The New York attorney general’s lawsuit does not relate to accounting, however. At most it’s only peripherally related – it is believed that Dell’s accounting problems may relate to how it dealt with warranties.
As well as facing regulatory investigations, the company has also lost its market share leadership to Hewlett-Packard, missed financial targets, and lost chief executive Kevin Rollins.
Returning CEO Michael Dell is trying to return Dell to its former glories, and the company has been engaged in a great deal of customer outreach through blogs and user-participation web sites, which have seen the introduction, for example, of a Linux desktop and the resurrection of Windows XP computers.
Attorney General Cuomo has set up a web site at nyagdell.com that Dell customers can use to file complaints against the manufacturer.
Cuomo’s predecessor, Eliot Spitzer, made a name for himself going after powerful industry names, such as the investment banks that inflated the dot-com bubble and the DRAM vendor cartel that was fixing memory chip prices. Spitzer is now governor of New York state.
