Attorneys General reach deal to debug Dell’s customer service

Dell to refund consumers under settlement with 34 states

SEATTLE – Dude, you might have a Dell settlement check coming! Attorney General Rob McKenna announced today an agreement between the Attorneys General of 34 states and Dell under which Dell will provide restitution to customers who experienced problems with the company’s financing promotions, rebate offers, technical support and repair policies.

“It’s time for a reboot of Dell’s customer service system,” McKenna said. “Our agreement requires disclosures to prevent future communication breakdowns and ensures that customers who are owed money are promptly paid.”

Under the agreement, Texas-based Dell, Inc., and its subsidiary, Dell Financial Services, LLC, admit no wrongdoing but agree to pay $1.5 million in restitution to eligible consumers who file claims postmarked by April 13, 2009. Dell cooperated fully with the attorneys general during their investigation.

Dell will pay an additional $1.85 million to the states for reimbursement of legal costs and other expenses. Washington will receive $200,000 of that amount.

Assistant Attorney General Katherine Tassi of the Attorney General’s Consumer Protection Division said Washington and Connecticut jointly led an investigation into Dell’s sales practices after customers complained about an array of issues. Some applied for zero-percent financing then were charged higher interest rates. Others had trouble obtaining warranty service on their Dell computers. Many said they never received promised rebates.

“The deals Dell made and the terms computer buyers thought they agreed to didn’t always compute,” Tassi said. 

One consumer said she made a purchase with zero-percent financing for 18 months and made her payments on time. But the last payment was applied late. The customer was then billed $668 interest for the entire financing period.

Under the settlement, Dell agreed to the following:

FINANCING AND CREDIT OFFERS

• Disclose in advertisements for promotional credit offers that the majority of consumers who apply won’t qualify for the best annual percentage rate (APR), and disclose the range of initial APRs that consumers who are not considered the “most qualified borrowers” are likely to receive.
• Inform consumers considering applying for promotional financing that the application is for a revolving open credit account, that minimum monthly payments are required and that approval of the account does not guarantee that the consumer will also qualify for conditional financing promotions (such as zero-percent interest for 90 days). Explain how finance charges are calculated, disclose any penalties and inform the consumer whether subsequent purchases made using the credit account will be subject to the same or different financing terms.
• At the time of credit acceptance, disclose whether the applicant has qualified for any conditional financing promotion.

WARRANTIES AND SERVICES

• Fulfill its warranty obligations within 30 days from the date of notification or receipt of a defective product.
• Disclose whether phone-based troubleshooting or remote diagnosis is required before Dell will provide on-site repair or warranty-related service.

REBATES

• If a rebate is available, provide the necessary rebate documentation at the time product is delivered or the service is provided.
• Mail rebates within the specified timeframe, or within 30 days if no date is specified.

ADDITIONAL PROCEDURES AND POLICIES

• Implement written policies to ensure compliance with the settlement, including procedures that address issues such as:
  • Informing consumers of their right to cancel orders made with the Dell Credit Account within three days after receiving final credit approval and the written terms and conditions.
  • Communication between Dell and Dell Financial Services when a consumer returns a product purchased with credit.
  • Removing consumer accounts from collection agencies and providing accurate information to credit-reporting bureaus.
• Substantiate any claims Dell makes about the quality of its customer service. Dell can use the term “award-winning” to describe its customer service only if the company received such an award within the past 18 months.

The following states participated in the settlement: Arizona, Arkansas, California, Connecticut, Delaware, Florida, Illinois, 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, Washington, West Virginia, Vermont, and Wisconsin.

[Update:] Additional states have also reached separate agreements with Dell. As of this afternoon, the company announced that it has reached agreements with every state except for Georgia, New Hampshire and New York. New York previously sued Dell regarding similar allegations and a Supreme Court judge ruled against the company.

CONSUMER REFUND REQUESTS:

It’s not yet known how many consumers in Washington or nationwide may be entitled to refunds under the settlement. Consumers may be eligible for restitution if 1) They have a valid complaint concerning a product that was purchased between April 1, 2005, and April 13, 2009, and is addressed by the agreement and 2) Dell owes them money.

Washington residents who haven’t submitted complaints but believe they are eligible for refunds should make a request by downloading a claim form at /settlement-refunds. Consumers can also call 1-800-551-4636 between 10 a.m. and 3 p.m. weekdays to request a form by mail. The deadline to submit claims is April 13, 2009.

Eligible consumers who previously filed complaints with the Attorney General’s Office on or after April 1, 2005, will be mailed claim forms. If you believe you are eligible and do not receive a claim form within two weeks of today’s date, download one from our Web site or contact the Attorney General’s Office for a claim form.

Answers to common questions can be found on our Web site.

Consumers in other participating states should contact their Attorney General’s Office.

The amount of money issued to individual consumers depends on the number of eligible recipients and the total amount claimed.

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Media Contact: Kristin Alexander, Media Relations Manager – Seattle, (206) 464-6432, kalexander@atg.wa.gov

Editor’s Note: A copy of the agreement that was filed is posted online. A court-stamped version will be substituted later.