Wednesday, May 28, 2008

The New York Times
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May 28, 2008

New York Judge Rules Against Dell in Suit Over Marketing

ALBANY (AP) — A New York judge concluded Tuesday that the computer retailer Dell engaged in repeated false and deceptive advertising of its promotional credit financing and warranties.

Justice Joseph C. Teresi of State Supreme Court ordered Dell to disclose more clearly that most customers do not qualify for free financing or get “next day” repair service.

The New York attorney general, Andrew M. Cuomo, sued Dell last year.

“For too long at Dell the promise of customer service was a bait and switch that left thousands of people paying for essentially no service at all,” Mr. Cuomo said.

The attorney general’s office had 700 complaints against Dell when the lawsuit was filed in May 2007 and has received more than 1,000 since, a spokesman, John T. Milgrim, said.

A Dell spokesman, Jess Blackburn, said Dell disagreed with the judge’s decision and would be putting up a vigorous defense, although it had not decided yet whether it would appeal.

The company said earlier that it had six million transactions in New York from 2003 to 2006, with the complaints representing only a tiny fraction. Dell also told the court that it had started selective recording and auditing of sales representatives and had invested millions of dollars in customer service and technical support.

According to the judge, Dell ads offered promotions like free flat-panel monitors, additional memory, rebates, instant discounts and financing with no interest or no payments for a period to “well qualified” or “best qualified” customers. Mr. Cuomo’s submissions, however, indicated as few as 7 percent of New York applicants qualified for some promotions.

The judge also said many affidavits mentioned long telephone waits for technical support, numerous phone transfers among departments, the need for repeated customer calls to get through and “numerous instances” when Dell refused to provide on-site service before it had determined what parts needed to be replaced.