January 12, 2009

Attorney General Corbett announces $3.35 million multi-state consumer protection agreement with Dell; consumers have 90 days to file claims

HARRISBURG - Attorney General Tom Corbett today announced that Pennsylvania, along with 33 other states, have reached a $3.35 million consumer protection agreement with Texas-based Dell, Inc., ("Dell") and its subsidiary, Dell Financial Services L.L.P. ("DFS"), addressing concerns about promotional financing offers and rebates, along with warranty and repair services.

Corbett said the Attorney General's Bureau of Consumer Protection received numerous complaints from consumers who believed they were purchasing Dell products with zero-percent promotional financing, or other low-interest offers, only to discover that they were charged much higher rates because they failed to qualify for the promotional offer.  Consumers also complained that they never received their promised rebates and that Dell failed to honor warranties when they had problems with their computers. 

"Special financing rates and other promotional offers can have a major impact on consumers' decisions about whether or not to make a purchase, or how much they intend to spend," Corbett said.  "Dell has a responsibility to clearly inform consumers about whether or not they qualify for special promotional financing offers so that there are no surprises when consumers receive their bills." 

Corbett says the consumer protection agreement with Dell also requires the company to ensure that rebates are provided in a timely manner and to be more responsive to consumers when they have warranty issues with their Dell computers.

Under the terms of the agreement, Dell will pay $1.5 million in restitution to eligible consumers who file claims by Monday, April 13, 2009.  Pennsylvania consumers may be entitled to refunds if they file a valid claim form before the April 13th deadline; if their claims involve a Dell purchase made between April 1, 2005, and April 13, 2009; the subject of the claim concerns conduct that is addressed by the settlement agreement; and Dell owes the consumer money. 

Corbett said the Attorney General's Office will mail claim forms to those consumers who have already filed complaints with the Bureau of Consumer Protection and whose claims may be covered by the agreement. Consumers can also obtain the Dell claim form and instructions by calling the Attorney General's Consumer Protection Hotline, at 1-800-441-2555, or using the following links to download the necessary form and instructions:

• Download the instructions for the PA Dell claim form
• Download the PA Dell claim form

Pennsylvania consumers who believe they are eligible for refunds are encouraged to submit claim forms within the next 90 days.  All claim forms must be postmarked no later than April 13, 2009.

Corbett says the consumer protection agreement with Dell involves the following states:  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. 

In addition to consumer restitution, Dell will pay an additional $1.85 million to the states for reimbursement of legal costs and other expenses other consumer protection and education purposes. 

Corbett said the consumer protection agreement requires Dell to take the following steps to address various concerns:

• Disclose in advertisements for promotional credit offers that the majority of consumers who apply will not 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.
• 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 time-frame or within 30 days if no date is specified.
• 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.

Corbett said that Dell is also required to 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.
• Implement a complaint resolution process specifically for consumer complaints filed with the Offices of Attorneys General to ensure those consumer complaints filed against Dell are addressed promptly and efficiently.

The Assurance of Voluntary Compliance against Dell, Inc. and Dell Financial Services L.L.C. was filed today in the Commonwealth Court, in Harrisburg, Pennsylvania, by Senior Deputy Attorney General John Abel and Deputy Attorney General Jacqueline M. D'Angelo of the Attorney General's Bureau of Consumer Protection. 

# # #