May 15, 2007 9:45 PM PDT

N.Y. attorney general accuses Dell of fraud

Dell is being accused of making false promises to customers to drive sales, according to a lawsuit filed Tuesday by New York Attorney General Andrew Cuomo.

The court filing accuses Dell and Dell Financial Services of 10 counts of fraud, false advertising and deceptive business practices, including offering misleading financing, and failing to honor rebates and warranties.

The state of New York is asking for an injunction of Dell's allegedly bad business practices and an order that the world's second-largest PC maker pay an unspecified amount of damages to customers found to be affected, in addition to a $500 civil penalty payable to the state of New York for each violation.

"Dell's consumers were intentionally misled, and they had to pay for that privilege. I hope this lawsuit sends a message to companies large and small that delivering a product is simply not enough--the promises they make must be delivered as well," Cuomo said in a statement Wednesday. His office set up a Web site Wednesday for consumers wishing to be part of the suit.

The suit (PDF: Cuomo v. Dell), filed in Albany County, N.Y., accuses Dell of "bait and switch" tactics in which customers are encouraged to apply for zero-interest financing, only to be misled and offered credit lines with up to 20 percent interest rates when they do not qualify for the financing promotion.

In addition, the suit alleges that Dell Financial Services bills customers for canceled orders, as well as for returned or missing merchandise. As a result, DFS and other collection agencies harass consumers for "months on end" for payments they do not owe, according to the petition.

The PC maker's advertising campaign, which touts its award-winning tech support department, is also targeted in the suit. Promises made on television are not met, according to the suit. Customers who purchased warranties are instead met with "a nightmarish array of obstacles in their quest for service."

Dell spokesman Bob Pearson told CNET News.com that the company will contest the suit. "We are confident that our practices will be found to be fair and appropriate. While even one dissatisfied customer is too many, the allegations in the AG's filing are based upon a small fraction of Dell's consumer transactions in New York. We are committed to providing a positive experience to all of our customers every day," he said in an e-mailed statement.

Pearson said the suit is not related to the Securities and Exchange Commission's investigation into Dell's accounting practices. Dell's own internal investigation into the matter yielded what its audit committee called "evidence of misconduct." As a result of the SEC's investigation, Dell has filed only preliminary quarterly financial reports for the past three quarters.

In December, analyst firm Friedman Billings Ramsey criticized the way Dell accounted for warranties, saying the company used an "unusual" method for accounting for the money it takes in from warranty sales and the money it reserves to handle expected warranty claims.

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37 comments

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Dell Fraud
I love Dell laptops. That said, 3 of the 7 I have have had their video cards go out within 10 to 15 months. The only one that went out within the year, thus still under warrenty, was my XPS Gen 2. When I called in they said I had only a 3 month warrenty. I assured them it was a year and even had 2 employees tell me they had not heard of the XPS Gen 2s ever having a 3 month warrenty but the computer said 3 months and they had to go by that. It cost me $500 to fix it becasue they said they had to replace my motherboard too. As far as financing, my girlfriend and I both have accounts. When I added a second laptop to my account they started raising the interest from 15% until I hit 27%. No reason given and no, they would not lower it. My girlfriends account remaind at 15% right up until she added a second laptop to her account. Same thing happened, the interest went up to 27%. This was at a time when the prime interest was at it's lowest. We paid off both accounts with a 10% interest credit card and decided we would never use their financial services again. Raising the interest for no reason was intentional and I believe it should be illegal. All the technical service and the work done on the machines is top notch. I called on Tuesday, had a box on Wednes, had the box picked up on Thursday and was sent an email saying they had received it, fixed it, and shipped it back out Friday. Sure enough, it arrived Monday and has been working perfectly for 3 months. They even upgrqaded my video from a 6800 to a 7800 nvidia.
Posted by zarchon1 (32 comments )
Reply Link Flag
why?
If I had the same experience you've claimed with any company, I
would promptly quit doing business with them.

But I never understood why an abused wife would stay with her
abusive husband either.
Posted by Dalkorian (3000 comments )
Link Flag
Dell
I think the allegations against Dell are really over the top. Pick on a big corporation, get millions, seems to be more and more the American Way for lawyers! (The lawyers get the millions, the people get a few measley cents!)
Posted by etbob1 (2 comments )
Reply Link Flag
Dell
If you experienced what we went though just to get our computers fixed, you would be on the bandwagon too. I have a laptop, and I was told when I bought it I could take it in for sevice to a local customer service dept. That was a total lie. They wanted to do most of the service over the phone, and then when it still didn't work they had me send them my laptop. It was the worse experience I have ever had from a company that calls themselves top notch.
Posted by shellbell923 (2 comments )
Link Flag
Prosecution or Political Ploy??
The old joke is that "AG" not only stands for "Attorney General" but also "Almost Governor". Another overzealous NY prosecutor named Eliot Spitzer somehow comes to mind...

State AGs are political offices. Lawsuits like this will never see a verdict in court, ever! It needs no basis in law. The AG will bully and browbeat Dell in front a media circus until Dell settles for a lot of money, *REGARDLESS* of any actual wrongdoing.

The State gets a ton of cash and the AG scores huge political points "for protecting the people of New York."

After all, the AG's last name *is* Cuomo (and was married to a Kennedy, no less.) He's already eyeing the Mayor's office, the Governorship... or even the Whitehouse.

Dell is just his first big victim, to be prosecuted, judged and convicted in the court of public opinion.
Posted by mbenedict (1001 comments )
Reply Link Flag
YOU'RE 100% RIGHT
CAN'T AGREE MORE.........
Posted by Joelieb1234 (8 comments )
Link Flag
YOU'RE 100% RIGHT
CAN'T AGREE MORE.........
Posted by Joelieb1234 (8 comments )
Link Flag
Prosecution or Political Ploy??
BINGO. You da dude. I was going sing my song, but you did a good solo and hit nail on the "Doberman" Spitzer head. And Cuomo wants to emulate dad I'm sure...
Posted by troob (5 comments )
Link Flag
Prosecution
Take your political crud elsewhere on this. Anyone who knows much about Dell is familiar with their questionable practices, shoddy workmanship and poor support.
Posted by ddesy (4336 comments )
Link Flag
The Truth At Last!
Your comment was so true that virtually nothing else can be added to it.

It's that goof, the Junior Cuomo, simply trying to position himself for a run at his old man's former slot in a few years.

New York liberal pandering politics at its best!

You won't see some Texas political hack trying that crap with Dell, I can assure you!

He would probably be recalled well-before the next election if he did...
Posted by Travis_Lloyd (11 comments )
Link Flag
Dell of Fraud
Is this a class action Law suit, because I had similar problems with Dell in the past. It was a nightmare that lasted for about 5 or 6 months trying to get service from them and getting the run around on the telephone. I still have documentation on my experence with them. Please contact me to let me know what I should do.

Michelle Newman
nurse23lvn@hotmail.com
Posted by shellbell923 (2 comments )
Reply Link Flag
Dell fraud
Im not sticking up fro Dell here. But from my experience in
computer repair. I see many consumer's trying to defraud computer
maker's after they themselves make a mistake. Most people do not
take the time to read warranty contracts. Buying extended
warranties are just for giving a computer maker extra profit!
Buy a computer with a long basic warranty and you will be happier.
Laptop are notorious for short warranties because of their
portability.
Posted by jesmac418 (35 comments )
Reply Link Flag
Corporate Criminals
I work for dell. I was there when the president of Dell Financial Services (DFS), John Zavoyna, gave his speech and left everyone in the all-hands finance meeting gasping. He said that there are people who pay 25-30 percent interest and that Dell needs to use their vast databases to target these people. Dell has a layer of corporate criminals strip-mining consumers, government, vendors everyway they can. They deserve this. Every state should sue Dell. There's no lack of evidence.
Posted by iWorkAtDell2 (2 comments )
Reply Link Flag
../
And this is different than any credit card company targeting college students? People who pay their balances off on time don't make any money for the company. There are also people with bad credit and regular credit cards who pay 25%-30% interest. Should you sue Mastercard and Visa?

I'm sure Dell discloses the financing terms up front in a contract, so its buyer beware. If you are dumb enough to pay 25% interest when you can get 5% at your bank, is this really Dell's fault?
Posted by brodie657 (33 comments )
Link Flag
Not Accurate
As a spokesperson for Dell, I'd like to set the record straight: the comments attributed in this thread to the head of Dell Financial Services are false and not worthy of additional comment.
Posted by johnqpope (13 comments )
Link Flag
Bait and Switch
I am so glad someone is finally onto Dell's rip off artists. It's not just in New York, I'm in California and when I purchased a laptop from them I could have paid it in full, but was told they would give me 6 months of free financing, however that's not what I got. They started charging interest and late fees after the first month and when I called they said only people with excellent credit get that, which I have. So they pulled the old bait and switch on me, and I was so furious I paid it off immediately and swore to never buy from them again.
Posted by nmdrake (1 comment )
Reply Link Flag
You have my sympathies. . .
My roommate went through exactly the same thing with Dell. His FICO score is 792; excellent credit by any other organizations standards but was told he didn't qualify for the six months interest free crap because it wasn't excellent. How the heck do they define excellent?
Posted by psychosmurf (60 comments )
Link Flag
Dell Fraud
DEll has an excellent product but the "customer service "sucks", imagine trying to teach the people of India employed at Dell's call center to talk like they are from Texas!! Hah!! Get real!! I purchased a Dell pc system from from QVC in Dec 05 most of the warranty is gone especially for tech help. Picking up a "virus" led me to Dell's tech help & purchasing a "Dell on Call value bundle" after fours hours & going through three tech reps that should have been named Larry,Moe & Curly! Later that day I attempted to get a refund which I was promised by a manager. Weeks later still no credit refund, & then getting involved with another trio & being transfered five times & finally given the number of QVC which I tried to no avail to tell them it "WAS NOT" a QVC problem. But do to Dell's inept customer service I was forced back to QVC after about ten days QVC got the problem taken care of! QVC telling me that Dell was "unware" I asked or was asking for a refund! Hellooooooooooooo!! Never again!!
Posted by pathfinder1946 (3 comments )
Reply Link Flag
What a bunch of Maroons
Most of the comments contrary to ensuring the consumer gets fair value for the dollar are either extremely naive or arrogantly dismissive.

It doesn't matter if you been in the IT field for any number of years you have only a very limited scope or set of experiences with which to judge and base your copious pronouncements on and consequently fall into the trap of offering unhelpful and contradictory testimony.

Those that are so quick to belittle others for thinking that they would get a fair shake, or that the business world operates in any way other than what has happened here are offering nothing but their own shattered dreams and illusions to crush the hopes and optimism of others.

We will get satisfaction and we will make businesses accountable for the crap they spout.

With the federal business development policies moving core sectors off continent you had darned well better start making them pay ("Make June 6th the buy nothing day" to show you have a voice).

I have conversed over the years with Michael Dell bringing many such scams and mechanism of poor support to his attention, and having gotten the atention I needed made the stupid assumption that he was getting Dell buff. So much so I was just about to start recommending them again. Well that's $10k I know they won't be getting.

Too bad it was not the real cad of the industry, hp.

Boo Hoo Hooo those poor businesses how can they make any money? Just like the auto industry whjy would I care if they go out of business, no my fault they're maroons too.
Posted by Dragon Forge (96 comments )
Reply Link Flag
rite on! ihatedell dot net
When Windows Genuine Advantage started, my brand new Dell system (with a label on it marked "REFURBISHED" !?) wouldn't certify as genuine. After weeks on the phone with Dell trying to get them to fix the system, I gave up and called Microsoft support. Believe it or not, Microsoft ~ free of charge ~ stepped me through all the processes necessary to fix Dell's shoddy O/S pre-install and assigned me a new O/S tag number.

The senior Microsoft tech who handled this by remote and assigned me the new system number told me a major reason why Microsoft started the genuine program was to catch major counterfeiters like certain OEM's who were illegally selling for-export-only operating systems domestically, and that I was unfortunately one of the many customers who purchased precisely such an illegal system. She told me Microsoft was grateful for my contacting them directly & gave me her direct number to phone her back if there were any further ways she could ever help.

Microsoft is certainly not God, nor is Dell Satan lol. But one thing this experience proved to me is that Dell ~ as a company ~ has become essentially redundant. They serve little practical purpose anymore, as the line between hardware & software continues to get more blurred in favor of the big software houses. Dell is to the 21st century what the American automotive industry had become by the late 20th century ~ redundant. And ~ as Microsoft said to me that time ~ Dell should stop breaking the law.
Posted by amy.licious (10 comments )
Reply Link Flag
Is this funny?
The first time I clicked to the story, there was a Dell advertisment next to the headline. You can make it happen if you leave and come back a few times.
ROFLMFAO
Posted by sgtlyon (17 comments )
Reply Link Flag
If it was Apple, they'd get a slap on the wrist
Apple has pulled some of the same things with their line of credit, etc. Yet Apple gets away with it, but when Dell does the same things, they get hammered for it.
Posted by Orion Blastar (590 comments )
Reply Link Flag
Because Apple users...
...bend over and take it [i]willingly[/i]. Heaven forbid that we whine before the altar of the Temple of Jobs. ;)
Posted by make_or_break (3747 comments )
Link Flag
one of the minority
If people who try to make use of Dell's extended warranties only to face a plethora of roadblocks and broken promises are the minority then I'm one of the minority. I own over 25 Dell servers and over 60 Dell desktop computers. I've attempted to make use of the extended warranty dozens of times. Not one time has Dell met their commitment. My favorite Dell response was "Why can't you just use the parts that work and be happy with that?" followed closely by "we only have repair parts to sell, all of the free warranty parts are out of stock. Would you like to purchase a repair part?" No.. I'm not kidding.
Posted by dwreid (51 comments )
Reply Link Flag
Bait & Switch aka Dell
Personal Experience Lesson:

I called on one of Dell's adds just to see if
the deal was really a deal, it was just a
hook. By the time I listened to the spheil <(sp)
I knew the deal. I make it a point that no matter
how much I may be enticed; just back away.
Posted by janandasample (1 comment )
Reply Link Flag
Dell poor business practices
I've ordered a Dell Inspiron 1521 on July 3, 2007, ESTIMATED delivery date of July 18, then an estimated delivery date of July 25, now August 1.

I called on the 17'th to see the status of my order and was told everything was good to go. On the 18'th I was then told that my high resolution display was on back order. Same thing on July 24'th, everything was good to go. On the 25'th another delay. This time nothing showed up on any of their computer systems. Chat system showed nothing and so did the system with their 800#. Talked to an Electronics and Accessories person only to be told that the "Cover" was on back order with no written estimated date they would be in stock.

It appears the color I chose is one of the popular ones. It seems that there are numerous systems and no one knows what's really going on.

I guess Dell has outsourced so much they now consider themselves a "Mail Order" business. This is what I've been told numerous times from Dell. Before Dell does these HUGE advertising sprees regarding NEW systems, they should make sure that their "outsource" companies are prepared in advance for the influx of business.

I was given a FREE upgrade to "Next Business Day" delivery after 1 call and after another call was told I'll get a $50 credit.

On the last call I made to Dell I was told that the Messenger Bag (carrying case) had a 3 week backorder!! If there's that much of a back order that they are aware of, Dell should put up a "temporarily out of stock" when placing an order until they know it is available.

It's kind of bad when their website says you can CHAT LIVE with a person or call an 800# for information, and when you call you get one set of information from one, and different information from the other.

Very poor customer service as far as that's concerned.

After reading what others posted about "Extended Warranties" I'm glad I did like I always do, I did NOT purchase it!

Unfortunately I've used DFS for purchasing my system and am planning on paying off the computer within 4-5 months, if not sooner!

Maybe I'll get my system by Christmas. Hopefully the Inspiron is worth all the hype they are splattering all over the place.
Posted by michael2401 (1 comment )
Reply Link Flag
I have an Inspiron 1521 and I hate it!!! I was just told that it is a "DANGER to me and my family" this is due to how hot it gets when in use. I can't stand talking to Dell their customer service sucks and I really can't stand talking to a rep from another country.. I have sent my system to Dell twice to be fixed and was told nothing was wrong with it and in between the times sent they sent someone to replace my mother board. HMMMMMMM Nothing wrong right? I also sent in a list both times and nothing was done for any of the problems. SO if you want a Inspiron DON'T GET ONE!!! or if you do you can now buy them at Walmart for about 700 there is no waiting for them there.

I have tried to get them to take back the computer that was bought less then a year ago because of all the problems or even to replace it with a brand new one. I have now had to try to contact an atty. to help me get things right! Seeing how they have NO problem telling me that this computer is a "DANGER" to me and my family but won't give that to me in writing I think is pretty sad they tell you these things but they won't give it to you in writing! So make me worry about me and my family now everytime I use my computer is really sad! Oh and so everyone knows the batteries in some of the laptops if they get to hot will explode....
Posted by lulu44035 (1 comment )
Reply Link Flag
Who can I contact directly at DELL Financial Services? We're having the same problem in Michigan, and this involves someone in the Air Force when he bought the DELL laptop. Pls email response to yannybg1@hotmail.com. Thanks.
Posted by b2193 (1 comment )
Reply Link Flag
My computer isnt even a year old and the CPU pump failed. I have been waiting for parts to ship from dell for 5 weeks now. Every time I call them they tell me the parts should ship out over the next two days which they never do. Some next day service? What are my options? I dont think they will ever repair my computer, $9000 for computer that cant boot up.
Posted by xPappillonx (1 comment )
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