Dell settles financing, rebate lawsuit with states

As posted by: The Associated Press

SEATTLE — Dell said today it has agreed to a legal settlement with states that claimed the computer company made misleading financing and service offers to PC buyers.

Dell said in a statement it will pay $3.85 million to at least 45 states participating in the settlement. A portion of the money will be used to reimburse states for legal costs.

Shares of Dell dropped 62 cents, or 5.6 percent, to $10.50 in afternoon trading.

Spokesman David Frink said Dell was contacted by the attorneys general from Connecticut and Washington, representing a larger group of states, last year.

"Consumers who sought and believed they received zero-percent financing were then ambushed by high interest rates and fees," said Connecticut Attorney General Richard Blumenthal in a statement. "Many consumers faced unacceptable obstacles obtaining warranty service on their Dell computers and others said they never received promised rebates."

Under the terms of the settlement, Dell agreed to give customers more information up front about what kind of financing they qualify for and allow them to cancel orders once they review final credit terms.

Dell also agreed to mail rebate payments and fulfill warranty obligations within a reasonable amount of time.

The settlement requires Dell to tell customers whether they must troubleshoot problems by phone before qualifying for in-person technical support at home. Dell must also justify claims about its customer service. For example, if it wants to use the term "award-winning," it must have won a customer service award in the past 18 months.

In its statement, Dell said the states' issues "represented only a very small percentage of the tens of millions of Dell consumer transactions in the states."
Round Rock, Texas-based Dell also said it had addressed these problems with many customers directly.

People who bought a computer or service on or after April 1, 2005, and had a problem with a financing offer, rebate or service can file a claim within 90 days with their state attorney general.