Dell to pay $4m over deceptive advertising

Computer manufacturer Dell is to pay out $4million in penalties, costs and damages over accusations of deceptive advertising, according to the Associated Press.

A case was brought against the company in 2007 by the New York attorney generals office, when it emerged that the company was advertising zero interest credit deals for new computers before denying the application. Customers were then encouraged to buy the computer at a far higher rate. Other customers were also found to have paid for warranty services that they never received.

The Texan based computer maker denied the allegations, but New York's Supreme Court ruled that Dell was guilty of fraud, leading to the financial settlement with the New York attorney general. In addition to the settlement Dell agreed to change it's advertising practices, but does not have to admit any wrongdoing.

"Today's announcement is the final step in ensuring New Yorkers harmed by Dell's deceptive and illegal business practices are fully compensated," said Attorney General Cuomo 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."

A spokesman for Dell said the company was happy the matter was resolved.

Affected customers can apply for refunds through the the New York attorney general's website for the case at www.nyagdell.com.

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32 Comments

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I'm glad. Dell has always been a bit shady. I've yet to meet someone who bought a computer for the advertised price for example. Once you get a hard drive, processor, operating system, etc. you've doubled the cost of the machine. It's a joke. And don't even get me started on their support. It's horrible. Good for them.

I've only bought Dells from the outlet site. They sell some nice $1000+ laptops for $600-700 and so far I've had no issues. I wouldn't finance a computer from anyone. There are cheap options out there if you don't have a ton of money and if I need a high-end machine I am probably doing work that requires it and assumes the funding for the machine. That said, I've never paid more than $900 for a computer and have always been able to do whatever I want. No need to finance that, much less from some shady Dell financing offer.

Dell has some of the worst customer support in the business and my experience with them has been an absolute nightmare. I can only hope they get their problems resolved and become one of the top PC companies again. As of right now, everyone I know laughs when I mention the word "Dell".

Interesting as I have a Dell and haven't had any problems. The OEM a large number of my friends have is HP and their problems with support is insane. They are always jealous of my Dell warranty support.

There sure is a range there. I've heard nothing but good things meanwhile some friends and co-workers have heard nothing but bad things. I guess it depends who picks up the other line when you call :P

I got a flyer from Dell yesturday that said: "A killer deal. Literally". So I guess Dell is planning on killing people in order to cut costs.

The customers got online, filled out an application, was denied the zero interest deal but offered a high interest deal?

That's pretty messed up. If someone is denied based on their credit score or whatever, they shouldn't be offered any credit.

Still, the article doesn't say they were told they qualified for 0% interest and then charged them otherwise. It said they were offered the same hardware for a much higher interest rate.

That is what is called "Bait and Switch" and that is illegal. Usually its on something on sale for a very low price, but when you get there they're all "sold out" so you end up buy something more expensive.

Dell wasn't "sold out" of 0% interest financing.

I thought that if a company is considering offering credit to a customer and they are a "higher risk" then they offer credit at higher rates. "Lower risk" or "well qualified" customers can get lower rates. Isn't that normal?

None of the comptuers were "sold out", the customers in question simply weren't eligible for the 0% interest.

C_Guy said,
Dell wasn't "sold out" of 0% interest financing.

I thought that if a company is considering offering credit to a customer and they are a "higher risk" then they offer credit at higher rates. "Lower risk" or "well qualified" customers can get lower rates. Isn't that normal?

None of the comptuers were "sold out", the customers in question simply weren't eligible for the 0% interest.

I don't think so.

When a car dealer announce 0% you'll get 0% or you'll get nothing. Some dealers will have 0% for 4 years and 5% for 6 years but the higher rates are not based on the risk but the number of years you'll take to pay. Same for credit cards. The rates are the same for everyone who can get the card.

I've never heard of rates changing according to the risk anyway not in Canada (there's surely not so legal exception to this but none i had to deal with in my life). You get the credit or you don't get it.

Different rates for different risk are common in the UK - or at least regarding loans from Banks, I have no idea on the rules for shops.

I'm not sure what the issue is, maybe Dell denied all 0% applications and thus it was advertising something you could not get.

mmck said,
Different rates for different risk are common in the UK - or at least regarding loans from Banks, I have no idea on the rules for shops.

I'm not sure what the issue is, maybe Dell denied all 0% applications and thus it was advertising something you could not get.

I'm pretty sure its the same in shops too. Basically, anything that is "paid off"

. . .makes you wonder, may be they should have settled out of court; that way there wouldn't have been court cost along with extra lawyers. Just wondering. . .

Yeah I have an XPS 630i which is notorious for it's false advertising. For instance LightFX 2.0 and PCI-E x16 are really x8 electrically.

There's a whole site dedicated to these issues, just Google my630i.