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TALLAHASSEE, FL – Attorney General Bill McCollum today announced that Florida has joined 33 other states in a $3.35 million multistate settlement with Texas-based Dell, Inc. and its subsidiary, Dell Financial Services, LLC. The agreement resolves allegations over the companies’ financing promotions, rebate offers, technical support and repair policies. As part of the agreement, Dell will pay $1.5 million in restitution to eligible consumers.

An investigation into Dell’s sales practices was launched in 2005 after customers complained about several issues, including financing and warranty services. According to consumer complaints, interest rates charged were often higher than those applied for, warranty service was problematic, and promised rebates were often not provided. Florida’s investigation was handled by the Attorney General’s Economic Crimes Division.

The agreement requires Dell to adhere to the following standards:

Financing and Credit

- Advertisements for promotional credit offers must disclose that the majority of consumers who apply won’t qualify for the best annual percentage rate (APR). The range of initial APRs available to consumers who are not considered the “most qualified borrowers” must also be disclosed.

- Consumers who are considering applying for promotional financing must be informed that the application is for a revolving open credit account, that minimum monthly payments are required, and that approval of his or her account does not guarantee he or she will also qualify for conditional financing promotions, such as zero-percent interest for 90 days.

- Dell must explain methods for calculating finance charges, disclose any penalties, and inform consumers whether subsequent purchases made using their credit accounts will be subject to the same or different financing terms.

- Applicants must be informed at the time of credit acceptance whether they qualify for any conditional financing promotion.

Warranties and Services

- Warranty obligations must be fulfilled within 30 days from the date of notification or receipt of a defective product.

- Dell must disclose whether phone-based troubleshooting or remote diagnosis is required before it will provide on-site repair or warranty-related service.

Rebates

- If a rebate is available, Dell must provide the necessary rebate documentation when the product is delivered or when the service is provided. Rebates must be mailed within the specified timeframe, or within 30 days if no date is specified.

Additional Procedures and Policies

Dell must implement written policies to ensure compliance with the settlement, including procedures that address the following issues:

- 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;

- Improving 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; and

- Substantiating any claims Dell makes about the quality of its customer service. For example, Dell can use the term “award-winning” to describe its customer service only if such an award has been received within the past 18 months.

Consumers may be eligible for restitution if they have a claim regarding a Dell purchase made between April 1, 2005 and the settlement date and if the claim concerns conduct addressed by the agreement. Consumers may file a claim by calling the Attorney General’s Office at 1-866-966-7226 or by filing a claim online at the Attorney General’s website at http://www.myfloridalegal.com/.

In addition to the consumer restitution, Dell will pay $1.85 million to the states for reimbursement of legal costs and other expenses. States participating in the settlement are Arizona, Arkansas, California, 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 copy of the settlement with Dell is available here.