Ever have a day (or a year) when nothing seems to go right? Dell has had a fantastically bad run over the past 18 months. Exploding batteries. Accounting problems. Management turnover. And then being sued by the State of New York over marketing and business practices.
It’s never fun to have a state AG using the term “classic bait and switch” in its formal compliant, an excerpt of which you can read below or click here to view the more extended version.
According to papers the Attorney General filed in court, Dell deprived consumers of the technical support to which they were entitled under their warranty or service contract by:
+ repeatedly failing to provide consumers who purchased service contracts promising “onsite” and expedited service with timely onsite repair;
+ pressuring consumers, including those who purchased service contracts promising “next day onsite” repair, to remove the external cover of their computer and remove, reinstall, and manipulate hardware components;
+ discouraging consumers from seeking technical support; those who called Dell’s toll free number were subjected to long wait times, repeated transfers, and frequent disconnections; and
+ using defective “refurbished” parts or computers to repair or replace consumers’ equipment.
The lawsuit accuses Dell of luring consumers to purchase its products with advertisements that offered attractive “no interest” and/or “no payment” financing promotions. In practice, however, the vast majority of consumers, even those with very good credit scores, were denied these deals. In a classic “bait and switch” scheme, Dell Financial Services (DFS) instead offered consumers financing at high interest rates, which often exceed 20 percent.
The lawsuit also alleges that DFS incorrectly billed consumers on cancelled orders, returned merchandise, or accounts they did not authorize Dell to open, and then continually harassed these consumers with illegal billing and collection activity. Although many consumers repeatedly contacted Dell and/or DFS to advise them of the errors, DFS did not suspend collection activities and Dell failed to expeditiously credit consumers’ accounts, even after assuring consumers it would do so. As a result, many consumers have been subjected to harassing collection calls for months on end and have had their credit ratings harmed.
Commentary: Mr. Cuomo is new to the office, and he is the latest in the Cuomo political dynasty in the state of New York. Seeing how predecessor Elliot Spitzer parlayed the position into a seat as Governor, Mr. Cuomo seems determined to try and follow in Spitzer’s footsteps. This includes taking the lead on filing lawsuits against corporations over their business practices.
Rumors have been circulating for weeks that NY State was about to file a lawsuit against Dell. Want a testament to the power of the NY State Attorney General? Dell’s stock actually ROSE after the lawsuit was filed as investors were RELIEVED that it was not something even worse.
