Dell Reaches Settlement In Multistate Customer Service Suit

The settlement was led by the attorneys general from the states of Connecticut and Washington. The Round Rock, Texas-based computer manufacturer chose to work with the offices of the attorneys general rather than have the matter taken to court.

"We helped lead a coalition of states in this investigation after receiving complaints of significant customer service abuses by Dell," Richard Blumenthal, attorney general of Connecticut, said in a statement. "Consumers who sought and believed they received 0 percent financing were then ambushed by high-interest rates and fees. Many consumers faced unacceptable obstacles obtaining warranty service on their Dell computers and others said they never received promised rebates. Many consumers may be eligible for hundreds of dollars for the abuses."

Dell has agreed to pay $1.5 million into an account for consumer restitution, as well as $1.85 million that will be distributed among the states included in the settlement. At least a portion of the settlement will be used to reimburse legal fees.

Under the terms of the settlement, Dell pledges to fulfill warranty obligations within 30 days of notification; not report late payments to collection agencies if a customer claims the debt is invalid and has proof; and disclose in advertisements for promotional credit offers that the majority of consumers won't qualify.

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"Dell must hit delete and then reprogram and restart customer relations by keeping all its promises. More than the money, this agreement provides profoundly important business practice reforms," Blumenthal said.

According to a statement released by Dell, the issues brought in the legal settlement affected only a "small percentage" of customers, and many of the business practices raised in the complaint had been eliminated by the computer manufacturer before the settlement.

Unfortunately for Dell this isn't the first encounter the computer manufacturer has had with claims of fraud, false advertising and deceptive business practices in the past 12 months.

In May 2008, New York State Supreme Court Judge Joseph Teresi called Dell's business practices a bait-and-switch scheme because customers were being denied the deals the company had promised.

In his ruling, Judge Teresi wrote, "Dell has 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."

The May 2008 ruling by the New York Supreme Court and the settlement headed by the states of Connecticut and Washington are unrelated.