Suit Spotlights Angry Dell Customers
Tuesday, June 5, 2007; 12:32 AM
Laurie Earhart, of Waynesboro, Pennsylvania, takes good care of her credit rating. So she wasn't surprised when Dell offered her zero-percent financing on the $1063 Dell 1500 Inspiron laptop she was planning to buy.
"The salesman and the Web site stated, 'pay no interest for 12 months'," says Earhart. With no interest to worry about, she recalls, spreading payments over 12 months would have had little impact on her family's tight budget. She took advantage of the offer, and she says the Dell laptop was everything she could have hoped for. But soon, Earhart's honeymoon with Dell ended.
In January 2007, Earhart received her third monthly statement from Dell and was shocked to see $162 in finance charges. The company had applied a 12 percent interest rate to what she still owed on the notebook.
When she called to notify Dell of what she was sure must have been an error, the representative told her it was no blunder. The company now believed Earhart's credit rating to be insufficient, according to the rep. "I told them I had excellent credit and it must be a mistake," Earhart says. But, she adds, the rep insisted she would have to pay the higher interest rate.
Earhart was steaming mad. She paid off the entire laptop to avoid further finance charges and complained to the Better Business Bureau in Texas, where Dell is located.
With the help of the BBB, Earhart later received a refund from Dell on all financing charges.
Earhart wasn't the only customer to see a promised zero-percent interest rate jump overnight.
Casey Henry of New York City saw the interest rate on her $1150 Dell desktop leap from zero to 27 percent. When she complained, the company offered her $200, but refused to reduce her interest rate. Henry declined the $200 and returned the PC she'd bought months earlier. With the help of the BBB, she received a full refund from Dell.
Last month, New York Attorney General Andrew Cuomo filed a suit (PDF file) against Dell and its financing arm, Dell Financial Services, alleging fraud and false advertising. The suit, filed May 14 in Albany County Supreme Court, alleges that, in addition to raising interest rates, Dell repeatedly failed to provide timely on-site repair to consumers who purchased "on-site" service contracts. It also charges Dell with perpetuating numerous other deceptive business practices, such as failing to make good on rebate offers.
In many of the complaints to Cuomo's office and to the BBB and in PC World' s interviews with unhappy Dell customers, a similar story emerges: When people asked Dell what happened to their promised zero-percent financing, the company offered no initial apology, claiming either that the low interest rate given to them was a mistake or that the low rate was available only for a few months--not for the year or longer some customers say they were promised.
Dell and DFS deny the charges in the lawsuit. "Our customers remain our top priority at Dell. We will vigorously defend ourselves in court," a company statement says. "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. We are committed to providing a positive experience to all of our customers every day."
Dell and DFS refused requests for an interview, but pointed out that complaints sent to the BBB by New York consumers were down 28 percent in 2006 compared to the year before. And all U.S. complaints about Dell to the BBB declined 12 percent over the same period. The figures were confirmed by the Texas BBB.