Ron Schenone

New York Sues Dell Over Deceptive Marketing – Justified, Or Not?

Posted by on May 19, 2007 | 5 Comments

When things goes bad, they just seem to get worse sometimes. That seems to be the case for Dell. Not only are they struggling trying to regain market share, fighting the bad publicity of a battery recall, the ire of dissatisfied consumers who are still waiting for Vista, but now the State Of New York says they are crooks as well. The bad press is sure to take a further toll on tumbling sales and is exactly what Dell does not need. According to the story at BussinessWeek:

Cuomo’s office on May 14 sued Dell, alleging that “consumers who purchase Dell’s products often find that many of the benefits and inducements featured in Dell’s advertisements are illusory.” The complaint says that of more than a million New York residents who applied for Dell credit from Jan. 1, 2003, to March, 2005, 48% were approved for “preferred” accounts. But of those, fewer than 17% were approved for the promotional financing offers. Most were offered the “regular” financing plan that carried higher interest rates and financing charges. Dell carried out a large-scale bait-and-switch scheme, offering low- or zero-interest deals that were difficult to qualify for and then steering customers into financing with less favorable terms without telling them, according to the lawsuit.

Now depending on where you read the story, there seems to be two distinct takes on this. One is that Dell has been screwing the public for years and just now got caught. OR Dell is being picked on now that they are down. OR, which is Ron’s take on all this, it should took some time to figure out that Dell hasn’t been playing fair for sometime. It wouldn’t surprise me if the next sorted tale is that they have been cooking the books. :-) I have no proof of this but something is really wrong with Dell and goes a lot deeper than most of us may suspect.

You just don’t drop off the radar screen from #1 to #2 without something not being right. Michael Dell coming back to sort things out could be a last gasp effort to plug holes in a dike, that the previous CEO may have opened. It is unfortunate that America has seen to many companies go down the crapper because of greed and mismanagement. I don’t think any of us would be surprised one way or another.

If we see one more Dell story in which their ethics are being challenged, hang on to your Dell. You may be able to SELL it to the Smithsonian as the last of a breed model. :-)

I sincerely hope that this is not the case. I think many of us in the PC business would be saddened to find out that Dell has been hammering the public for added profit.

Comments welcome.

[tags]dell, new york, lawsuit, marketing, [/tags]

  • marc klink

    “often find that many of the benefits and inducements featured in Dell’s advertisements are illusory”

    Take the above partial quote and substitute the name of almost any well-known company and you get another true statement. It is the nature of the beast. Most companies are more than willing to lie about benefits and the like because there is little chance that anyone will actually try to nail them down on it. As almost any attorney will say, truth in advertising claims are almost impossible to prove, because many deliberately are somewhat vague to obfuscate things, and in the small percentage of circumstances where one might prevail, the cost is overwhelming.

    I don’t believe that this is a big a problem as you seem to, because surely companies #2,#3, etc. will jump in to pick up the slack. Also, John Q. Public isn’t going to start searching for his long lost Bomar calculator to do his checkbook and taxes, after throwing away his computer in disgust with Dell. The only ones who will be affected are the poor souls who work for Dell. If they go under, they’ll be a mass migration from Austin to Cupertino.

  • john

    I bought a Dell. Three days later, I found out the person signed me up for high speed internet without my permission. I immediately canceled the order. It took three months and more phone calls than I care to recall to get full credit for the order. Of course, the people on the other end of the phones had the command of English of a water buffalo. I was never able to speak to someone in the states or did I ever receive a reply to letters sent to Round Rock, Texas.

    Legal action isn’t enough. Michael Dell should be drawn and quartered. Dell is the worse of the worse along with AT&T and the oil companies.

  • http://fractalbeanstalk.blogspot.com/ Tim Hodkinson

    I’m of the same opinion as Marc. Deception in advertising is normal and expected. And in the area of credit application it’s always been bad. Mind you, finding a way to tone down some of the really ridiculous claims would be a good thing.

    Look how many 0% financing deals there are for new cars, or “introductory” rates there are for internet or phone services. Don’t most of us take those with a grain of salt? The dirtiest ones are those that say, “first 3 months free” but you only qualify for 3 months free if you sign up for a year. If you don’t sign up, then you pay for the first 3 months. Either way you pay. It’s not deceptive because the fine print says all this. It’s like those 3-mile long Eulas that you have to click, I agree to.

  • http://wp3.lockergnome.com/nexus/blade/ Ron Schenone

    Hi Marc,
    Hopefully that will not be the case and Dell can still get their act together.

    Hello John,
    That is unbelievable. It is stories such as yours that are really going to hurt Dell.

    Thanks to you both for your comments.

    Ron

  • http://wp3.lockergnome.com/nexus/blade/ Ron Schenone

    Hi Tim,
    I always read the fine print! LOL It is unfortunate that we are a society of contracts with the ‘fine print’ concealed in such a way as to benefit the company and not the consumer. Even if one did read the fine print most people would not understand what they read.

    Thanks for your thoughts. Ron