Dell settles fraud claims with 34 states

Chris Rizo Jan. 12, 2009, 6:32am

CHICAGO (Legal Newsline)- Dell Inc., one of the world's largest computer companies, has agreed to pay $3.35 million to settle claims by 34 state attorneys general that it used deceptive financing and warranty practices.

The Round Rock, Texas -based company was accused of promising consumers zero-percent financing and then charging them higher interest rates.

There were also claims that consumers never received promised rebates and had difficulty obtaining warranty service on their Dell computers.

"This agreement is intended to help consumers who were harmed by Dell's conduct and ensure that Dell will change its financing and warranty practices," Illinois Attorney General Lisa Madigan said.

An investigation into Dell's sales practices was launched in 2005.

Under the multistate agreement, Dell and its subsidiary -- Dell Financial Services, LLC -- will pay $1.5 million in restitution to eligible consumers and $1.85 million to the states for reimbursement of legal costs and other expenses related to their investigation.

"It's time for a reboot of Dell's customer service system," Washington Attorney General Rob McKenna said. "Our agreement requires disclosures to prevent future communication breakdowns and ensures that customers who are owed money are promptly paid."

Attorneys general said consumers may be eligible for restitution if they file a claim with their office within 90 days of today's date so long as its concerning a Dell purchase made between April 1, 2005 and today.

Additionally, the computer company has agreed to overhaul its credit and lending practices, and promised, among other things, to fulfill warranty obligations within 30 days of notification or receipt of a defective product.

In addition to Illinois and Washington, also participating in the settlement, were attorneys general from Arizona, Arkansas, California, Connecticut Delaware, Florida, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, West Virginia, Vermont and Wisconsin.

In May, New York Attorney General Andrew Cuomo won a similar lawsuit against Dell and its financial services branch.

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