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Attorney General Ellen F. Rosenblum

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ATTORNEY GENERAL JOHN KROGER ANNOUNCES SETTLEMENT WITH DELL

January 12, 2009

Oregonians eligible for refunds have 90 days to file claims.

Attorney General John R. Kroger today announced that Oregon consumers who purchased a Dell computer since April 1, 2005 may be eligible for part of a $1.5 million restitution fund stemming from the company's financing promotions, rebate offers, technical support and repair policies. Consumers must file a claim with Oregon Attorney General's Office postmarked no later than April 13, 2009.

Under a 27-state agreement, Dell, Inc. (Dell) and its subsidiary, Dell Financial Services, LP, (DFS) headquartered in Round Rock, Texas, agreed to pay a total of $3.35 million as part of a settlement agreement. An Assurance of Voluntary Compliance (AVC) was filed in the Marion County Circuit Court. It admits no law violation and includes an additional $1.85 million to the states for reimbursement of legal costs and other expenses. Dell also agreed to change practices involving promotional credit and financing offers.

"As of today, Oregonians purchasing Dell computers online will be given clear and accurate information from the company," Kroger said. "Consumers should know and understand all the terms connected to a major purchase such as a computer before money ever exchanges hands. It is the only way a fair marketplace should operate."

Washington and Connecticut jointly led an investigation into Dell's sales practices after customers complained about an array of issues. Some applied for zero-percent financing and then were charged higher interest rates. Others had trouble obtaining warranty service on their Dell computers. Many said they never received promised rebates. One consumer said she made a purchase with zero-percent financing for 18 months and made her payments on time but the last payment was applied late. The customer was then billed $668 interest for the entire financing period.

Under the settlement, Dell agreed to the following:

FINANCING AND CREDIT OFFERS

  • Disclose in advertisements for promotional credit offers that the majority of consumers who apply won't 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.

WARRANTIES AND SERVICES

  • 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.

REBATES

  • 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.

ADDITIONAL PROCEDURES AND POLICIES

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.

CONSUMER REFUND REQUESTS

It is not yet known how many consumers in Oregon or nationwide may be entitled to refunds under the settlement. Consumers may be eligible for restitution if they file a claim with the Attorney General's Office postmarked no later than April 13, 2009. The purchases must have been made from Dell after April 1, 2005, and concern conduct addressed by the agreement.

Oregon residents who have not submitted complaints but believe they are eligible for refunds should contact Enforcement Officer Sally O'Neil at (503) 373-0374. Eligible consumers who already filed complaints with the Attorney General's Office after April 2005 will be mailed claim forms. The amount of money issued to individual consumers depends on the number of eligible recipients and the total amount claimed.

Consumers wanting information about consumer protection in Oregon may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only) (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392. The Oregon Department of Justice is online at www.doj.state.or.us.

Contact:

Consumer Protection Hotline, 1-877-877-9392 consumer.hotline@doj.state.or.us
Tony Green, (503) 378-6002 tony.green@doj.state.or.us, Media Contact |
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