The New York State Attorney General is after Dell (DELL) for deceiving consumers when it sold and financed Dell computers for the citizens of the fair state.
It appears that New York thinks that Dell was running a classic bait and switch. Bring in buyers with a promise of low financing rates and leave them with the kind of high interest rates that they pay on their Visa cards. According to The Wall Street Journal, the other portion of the complaint involves: "Dell denies promised rebates, and fails to honor warranties and service contracts by misleading customers and making it difficult to get technical support "
The first portion of the accusation seems a bit thin. Unless Dell lied in the section on interest rates that it offers consumers, buyers probably did not bother to read the fine print. It is a pretty standard problem when customers don’t read the terms and conditions. They may be onerous, but the customer did agree with them.
The second problems seems to be the much larger one. Not honoring service contracts and warranties has the scent of more attorneys general from other states getting involved. It also has that "class action" suit aroma.
Dell has clearly had problems with service. About a year ago, it brought in a customer service czar to try to repair the support services at the company. Hard to say whether that worked.
But, a big slug of legal action over warranties and written service agreements could pull Dell’s recover effort further off the track.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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