Dell Must “Reboot” Customer Service, State AGs Say
Dell will pay $3.85 million to settle cases being made with attorneys general in 46 states arising from problems with the computer vendor’s consumer practices, including no-interest finance offers, product warranties and service contracts.
State AGs said Monday that the company had used “deceptive” financing promotions that offered zero-percent financing, but then imposed higher-than-agreed fees and interest rates. Other consumers were allegedly unable to get warranted service done on their Dell hardware or were not given promised rebates for their product purchases.
To settle the cases, Dell has agreed to pay $1.5 million into a restitution fund. Consumers will have 90 days to submit claims to those funds. A second payment of $1.85 million will go to reimburse the states for their legal costs.
Connecticut Attorney General Richard Blumenthal, who spearheaded the case against Dell along with legal officers from Washington State, said in a statement that his state would receive $200,000 in its general fund for its expenses.
“Dell must hit delete and then reprogram and restart customer relations by keeping all its promises,” Blumenthal said. “More than the money, this agreement provides profoundly important business practice reforms.”
Under the terms of the multi-state settlement, Dell will provide customers with fuller information about the kind of financing they qualify for and will make it possible for them to cancel orders after they have been notified of their credit terms. Ads for its promotional credit offers will have to disclose that many, even most, consumers will not qualify for the rates.
The company must also refrain from turning late-paying customer accounts over to collection agencies if the customer has proof that the debt is invalid.
Dell will also have to tell customers when they must try to solve their computer problems by phone before requesting a truck roll from a Dell technician.
The company will also need to substantiate the claims it makes about its customer service—for instance, proving that customer service it describes as “award-winning” has actually won an award in the 18 months before the claim.
A statement from Dell said the practices complained of dated back as long as four years ago.
“The issues represented only a very small percentage of the tens of millions of Dell consumer transactions in the states during the four-year period,” the statement said, adding that the company has addressed the issues directly with many of the customer complainants and resolved them satisfactorily.
To date only New York State has filed a lawsuit over the charges, in 2007.
Last May a state Supreme Court judge ruled against the computer maker. The two sides in that case are still negotiating penalties and fines.
