The New York attorney general has filed a lawsuit charging that Dell used fraud and false advertising to increase profits on PC sales.
The lawsuit alleges that Dell misled its customers by applying high credit rates to their computer purchases although it had promised cheap financing.
The suit also alleges that Dell failed to deliver rebates, warranties and technical support as simply as it had promised, according to the lawsuit filed on 16 May by New York state Attorney General Andrew Cuomo.
"Consumers who purchase Dell's products often find that many of the benefits and inducements featured in Dell's advertisements are illusory," the lawsuit said about Dell and its business unit Dell Financial Services (DFS).
"Although Dell often heavily advertises the availability of 'no interest' financing, in reality, DFS uses ultra-restrictive underwriting guidelines, under which the vast majority of consumers -- even those with excellent credit histories -- do not qualify for promotional financing."
Under that plan, DFS signs customers up for no-interest loans, and then switches most of them to accounts with interest rates exceeding 20 percent without notifying them of the change, the lawsuit said. DFS also charged some customers for orders that were cancelled or never delivered.
"In many cases, DFS has harmed these consumers' credit ratings by incorrectly reporting their account as delinquent to the credit reporting agencies after they refuse to make payment on a nonexistent debt," the lawsuit said.
Dell denies the charges and plans to fight the suit, according to an e-mailed statement from spokesman Bob Kaufman.
"Dell will vigorously defend itself in court," Kaufman said. "We are confident that our practices will be found to be fair and appropriate. While even one dissatisfied customer is too many, the allegations in the AG's filing are based upon a small fraction of Dell's consumer transactions in New York."