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Dell Reaches Settlement With States

January 13, 2009

On Monday, Dell Inc. announced that it has agreed to a legal settlement with states claiming the company misled customers.

The company will pay a total of $3.85 million to 46 states in the settlement.

As a result, Dell saw its stocks drop 4.2 percent, closing at $10.65

Attorney generals from Washington and Connecticut first approached Dell with complaints in mid 2008. 

According to Attorney General Richard Blumenthal, the “epidemic-like wave of complaints” over Dell practices forced him to contact other attorney generals across the nation.

Blumenthal stated that buyers were offered zero-percent financing, but were eventually trapped under fees and high interest rates.  Some consumers never received rebates, and found it difficult to receive warranties on their purchases.

New York is the only state to sue Dell thus far.  In the case filed May 2007, the New York Supreme Court ruled against Dell.

According to Alex Detrick, spokesman for the New York attorney general’s office, Dell and the state of New York are still in dispute over reimbursements.

Dell’s settlement on Monday helped the company escape the possibility of a larger lawsuit. 

The settlement requires Dell to give consumers more information about their financing terms, and to let consumers cancel orders after reviewing their credit terms.

The company is also required to mail rebate payments, and complete warranty commitments quickly.

The settlement requires the company to inform customers that they must troubleshoot problems by phone before receiving in-person technical support.

Dell must also have won a customer service award within the past 18 months to use the term “award-winning.”

The company released a statement saying the state issues “represented only a very small percentage of the tens of millions of Dell consumer transactions in the states.”

The company added that they had addressed these issues directly with customers.

The settlement covered Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oregon, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, West Virginia, Vermont, Virginia and Wisconsin.

A person who purchased a product or service from Dell after April 1, 2005 and had issues with rebates, service, or financing has 90 days to file a claim with their state attorney general.

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