N.Y. attorney general suing Dell

updated 2:09 p.m. ET May 16, 2007

NEW YORK - New York Attorney General Andrew Cuomo on Wednesday accused Dell Inc. and its financial services affiliate of “bait and switch” advertising and failing to deliver on promised customer service.

Round Rock, Texas-based Dell lured customers with zero percent financing, then switched them to a higher rate without their knowledge at the time of purchase, according to the lawsuit.

Cuomo announced details of a lawsuit filed a day earlier in the New York Supreme Court, claiming that Dell and Dell Financial Services LP engaged in fraud, false advertising and deceptive business practices.

Dell denied those charges in a written statement from spokesman Bob Pearson.

“We are confident that our practices will be found to be fair and appropriate,” Pearson said. “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.”

Cuomo said his office had “received an unprecedented number of complaints against Dell, approximately 700 and they keep coming.”

“We want fairness,” Cuomo said Wednesday. “Either provide the customer service packages that you sell or don’t sell the packages.”

While Dell frequently advertises zero percent financing plans for computer purchases, the attorney general said that as many of 85 percent of those who applied did not receive that rate.

The lawsuit also claims that Dell sold onsite computer repair plans but failed to deliver, at times requiring customers to disassemble their own computers.

The lawsuit seeks an order requiring Dell to pay unspecified damages to affected customers and the state is also seeking penalties and costs.

In an unrelated probe, the Securities and Exchange Commission and Dell’s own audit committee have been investigating the company’s accounting practices.

In recent months, Dell has seen a management shake-up that included the departure of several top executives — including Chief Executive Officer Kevin Rollins and Chief Financial Officer Jim Schneider — and the return of Michael Dell as CEO.

With Dell at the helm, the company has been trying to orchestrate a turnaround plan to improve customer service and combat competitors who have eaten into Dell’s market share.

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