Dell slapped with fraud lawsuit

Dell is being accused of making false promises to customers to drive sales, according to a lawsuit filed by New York attorney general Andrew Cuomo.

The court filing accuses Dell and Dell Financial Services of fraud, false advertising and deceptive business practices, including offering misleading financing, and failing to honour rebates, warranties and service contracts.

The state of New York is asking for an injunction of Dell's allegedly bad business practices and an order that the world's second-largest PC maker pay an unspecified amount of damages to customers found to be affected.

A Dell spokesman said the company will contest the suit. "We are confident that our practices will be found to be fair and appropriate. While even one dissatisfied customer is too many, the allegations in the attorney general's filing are based upon a small fraction of Dell's consumer transactions in New York. We are committed to providing a positive experience to all of our customers every day," he said in an emailed statement.

The spokesman said the suit is not related to the US Security and Exchange Commission's (SEC) investigation into Dell's accounting practices. Dell's own internal investigation into the matter yielded what its audit committee called "evidence of misconduct". As a result of the SEC's investigation, Dell has filed only preliminary quarterly financial reports for the past three quarters.

In December, analyst company Friedman Billings Ramsey criticised the way Dell accounted for warranties, saying the company used an "unusual" method for accounting for the money it takes in from warranty sales and the money it reserves to handle expected warranty claims.

Erica Ogg writes for CNET News.com