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SACRAMENTO- California Attorney General Edmund G. Brown Jr. today announced an agreement between 34 state attorneys general and Dell under which the company will provide restitution to customers who experienced problems with the company’s financing promotions, rebate offers, technical support and repair policies. The agreement comes after the company failed to “fairly and honestly” provide information and rebates to its customers.
“There is an obligation to ensure that advertised deals are fairly and honestly applied,” Attorney General Brown said. “This settlement provides great restitution to Dell customers who experienced difficulties with the company’s less-than-ideal customer service practices of not disclosing hidden credit fees and failing to fulfill warranty work on its products.”
An investigation into Dell’s sales practices showed the company had failed to deliver on the terms that buyers had agreed to. Some consumers applied for zero-percent financing then were charged higher interest rates, others had trouble obtaining warranty service on their Dell products.
Under the agreement, Texas-based Dell, Inc., and its subsidiary, Dell Financial Services LLC, agreed to pay $1.5 million in restitution to eligible consumers who file claims postmarked by April 13, 2009. Dell will pay an additional $1.85 million to the states for reimbursement of legal costs and investigative resources. California will receive $75,000 in attorneys’ fees and costs.
Consumers may be eligible for restitution if:
• Have a valid complaint concerning a product that was purchased between April 1, 2005, and April 13, 2009.
• Dell owes them money.
Dell agreed to the following:
• Disclose that the majority of consumers who apply won’t qualify for the best annual percentage rate (APR)
• Disclose the range of initial APRs that consumers who are not considered the “most qualified borrowers” are likely to receive.
• Inform consumers 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.
• 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.
• 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.
• Inform 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.
• 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.
Consumers who believe they meet the requirements for reimbursement should contact the California Attorney General’s Public Inquiry Unit at 1-800-952-5225 or visit the website at www.ag.ca.gov/consumers/general.php to obtain the mandatory claim form attached below. Consumer then must return the completed claim form postmarked, or faxed to 916-323-5341, no later than April 13, 2009, to be eligible for reimbursement.
The amount of money issued to individual consumers depends on the number of eligible recipients and the total amount claimed.
The following states participated in the settlement: Arizona, Arkansas, 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
A Claim Form and Frequently Asked Questions list are attached.