New York Attorney General Andrew Cuomo accused Dell today of engaging in “bait and switch” financing tactics and ignoring service and warranty contracts. In a lawsuit filed in Albany, N.Y., Cuomo also charged the Texas computer maker with deceptive business practices involving rebates, billing and collection.
Dell denied the accusations.
Cuomo is seeking restitution to consumers, civil penalties and guarantees from Dell that it will not engage in any further “deceptive, illegal, and fraudulent practices.” The state did not release details on financial damages it might seek.
“At Dell, customer service means no service at all. Dell’s consumers were intentionally misled, and they had to pay for that privilege,” Cuomo said in a statement. “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.”
The lawsuit accuses Dell of attracting customers with advertising touting no interest or no early payment financing promotions. According to Cuomo, the “vast majority” of customers were denied the deals. Instead, Dell and DFS offered customers financing deals that often exceeded 20 percent.
The lawsuit also claims DFS incorrectly billed consumers on canceled orders, returned merchandise or accounts they did not authorize Dell to open. Cuomo said those same customers were then harassed with illegal billing and collection calls.
In addition, Cuomo alleges Dell repeatedly failed to provide timely on-site repair as promised in service contracts and discouraged customers from seeking technical support. The lawsuit claims Dell’s New York customers calling the company’s toll free support number were subjected to long wait times, frequent transfers and disconnections.
In cases where on site service was provided, the lawsuit claims, Dell used defective “refurbished” parts or computers to repair or replace consumers’ equipment.
Dell quickly responded with a statement denying the accusations.
“While our customers remain our top priority, Dell will vigorously defend itself in court. We are confident that our practices will be found to be fair and appropriate,” Bob Pearson, a Dell spokesman, said. “The allegations in the AG’s filing are based upon a small fraction of Dell’s consumer transactions in New York.”
Pearson added, “While even one dissatisfied customer is too many…We are committed to providing a positive experience to all of our customers every day.”
The lawsuit adds another woe to the world’s number one PC maker.
In January, former Dell CEO Kevin Rollins resigned over disappointing results and a pending Securities and Exchange Commission probe into the possibility of financial misstatements. Dell founder and president Michael Dell assumed the role of CEO.
In midday trading, Dell stock was up 2.7 percent to $25.34 per share.