RealTime IT News

Dell Sued For The Old Bait-and-Switch

Two Dell customers in California have filed class-action lawsuits against the company for what their lawyers call bait-and-switch marketing tactics.

San Francisco residents Rosemary M. Weber and Jonathan V. Holtzman say they got a bum deal when it came to ordering through Dell's catalogue. Both complained they had been pressured by salespeople with promises of either low-cost financing to lure them into installment payment schemes or better quality equipment than had been delivered.

Lawyers from Lerach Coughlin Stoia Geller Rudman & Robbins filed a class action suit on Feb. 14 in Superior Court for San Francisco County against Dell, Dell's financial services division (DFS) and its finance partner, CIT Bank, on behalf of Dell customers.

The complaint alleges that Dell preys on unsuspecting consumers with its scripted sales force, ever-changing ad offers and highly promoted "preferred" rates and "easy" financing packages which, without notice, then are changed to include much higher interest rates and hidden charges. Specifically, the suit claims Dell violates California's Consumer Legal Remedies Act (CLRA), the California Business and Professions Code and the Unruh Act.

"Dell offers one low-priced product and then substitutes a higher cost or lower quality item," Reed Kathrein, a Lerach partner whose firm is best known for filing stockholder lawsuits, said in a statement. "Dell promises 'easy' credit but no one qualifies. It then charges unconscionable high interest and other credit charges."

Kathrein told internetnews.com that Dell responded to the law firm's initial letter but could not confirm if Dell has seen the legal filing. He also said his office had received close to 100 complaints since August 2004.

"We received too many complaints to ignore," Kathrein said.

Dell spokesman Lionel Menchaca said the company would not comment on pending litigation.

In Weber's case, the San Francisco nurse told lawyers she had limited experience with computers when she responded in 2003 to a Dell ad and bought a notebook computer listed at $599, along with an $89 printer. She was billed $1,352 for her order and, at the urging of Dell's sales person, financed her purchase through DFS at an undisclosed interest rate that turned out to be between 27 and 39 percent.

Holtzman told his lawyers he responded to a Dell e-mail offer by ordering computer products at Dell's online store. He received a confirmation of his order and billing rate, but the products that arrived were of a lesser quality. Efforts to reach Dell and resolve the matter were frustrating and unsuccessful.

Lawyers at Lerach claim that because Dell equipment and services are sold exclusively by telephone and through Dell's Web site, their customers can view only pictures of the products prior to sale -- never the product itself.

In 2004, Dell spent $300 million advertising its products on television, in newspapers and catalogues and on the Internet. It shipped 5.4 million personal computers in the United States and generated $6 billion in revenue from U.S. consumers that year.

"Knowing that these consumers are not sophisticated, Dell nonetheless inundates them with a dizzying array of advertisements for Dell products," the complaint says. "While the names of the computers, model numbers and pictures are usually consistent, the details of Dell offers vary from one ad to another and even from day to day or hour to hour, with 'small print' disclaimers, the suit charges."

The class action applies only to California residents. A Proof Of Service document is due by April 15, 2005, with a case management statement due on June 30. The first case management conference is scheduled for July 15.