Dell To Pay $4 Million To New York Attorney General In Fraud Lawsuit

The agreement for restitution between the Attorney General's Office, Dell and Dell Financial services comes after a New York State Supreme Court judge in May 2008 found that the Round Rock, Texas-based computer manufacturer had engaged in false advertising, fraud, deceptive business practices and abusive debt collection from the state.

"Today's announcement is the final step in ensuring New Yorkers harmed by Dell's deceptive and illegal business practices are fully compensated," Attorney General Andrew M. Cuomo said in a statement. "Going forward, this deal means that Dell will have to clearly and fully disclose the terms and conditions of their products and services to avoid this kind of fraud at the consumer's expense. My office is committed to ensuring a fair and honest marketplace across New York by rooting out these unlawful practices, and we encourage anyone who was ripped off by Dell to come forward and file a claim to get their money back."

Part of the agreement also stipulates that Dell must make changes to its advertising, sales and financing. An additional change affects the way Dell will sell at-home or on-site services. Previously the hardware maker sold service contracts to customers without informing them that at-home diagnostics -- which could include opening the hardware -- may be required, even though a service agreement had been purchased.

Additionally, Dell must disclose the percentage of customers who may actually qualify for special financing promotions that the company runs.

"Dell cooperated with the New York Attorney General and staff to address the concerns and is pleased to have resolved this matter," said a spokesperson for Dell. "The case was based on a small number of complaints -- a relative handful -- representing a very small percentage of the millions of Dell transactions in New York during the period [back to 2004]. Dell had previously resolved many of these issues directly with affected customers before this settlement, and in fact, before the original lawsuit was filed. The settlement enables us to focus our efforts on providing all our customers a great experience."

Dell customers who may qualify for compensation as a result of the lawsuit must have financed a purchase through Dell after being misled into believing they had qualified for a "no interest" promotion. Individuals who purchased an at-home or on-site service contract who were subject to long telephone hold times, did not receive expedited service or were required to open the hardware during troubleshooting also are eligible for a refund.

Finally, in order to be able to receive part of the funds from Dell, individuals must have been a resident of New York and the problem with the service agreement must have taken place before May 14, 2004. For customers who were misled about Dell financing, the incident must have occurred before May 14, 2001.

Customers can apply for refunds through the Office of the Attorney General for New York State's Website.