Dell (NYSE: DELL) is known for its terrific customer service and catchy ads but the New York State Supreme Court has found that some of those ads were fraudulent and misleading.
Judge Joseph Teresi wrote that the company "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."
Dell will be prohibited from engaging in such conduct in the future and may also have to pay an as yet undetermined amount of restitution to consumers.
A lawsuit filed by New York Attorney General Andrew Cuomo alleged that the company's ads falsely led consumers to believe that they qualified for low- or no-interest financing when, in reality, many consumers didn't. Following the ruling, Cuomo said that, "For too long at Dell the promise of customer service was a bait and switch that left thousands of people paying for essentially no service at all. 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."
Dell says it's confident that only a small number of customers were effected -- the company's latest 10-K does not specifically refer to this risk factor, which indicates that the company does not believe the damages could be material. The market seems to agree, with shares of Dell flat on the news.
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Reader Comments (Page 1 of 1)
5-28-2008 @ 3:59PM
michael austin said...
I purchased my first Dell desktop system in 2003 and initially was very pleased...until many of the software included in the ad...turned out to be 30-day trials. The ad had led me to believe all the features were included for the long haul. Turned out not to be the case. In reality, the $1000. I "saved" through Dell I later paid for when I made the decision to purchase from the manufacturer which solicited me through information received from Dell. No further comment.
5-28-2008 @ 5:21PM
Patti said...
I have two Dell desktop computers and my daughter and son-in-law have one laptop, two desktop computers, a printer, and a wide-screen television. None of us have ever had a complaint with Dell products, and we find their customer service to be top notch. We've never had a problem they couldn't or wouldn't address, and we've always been completely satisfied with their tech support. I've never had anyone from HP come to my home to replace a part the way Dell did.
5-28-2008 @ 9:29PM
Raymond Bissonette said...
zac, as my near namesake please get effected and affected straight.
Ray Bissonette