Dell suit will allege misleading sales practices, say reports

The suit will reportedly focus on allegations that Dell misled customers over its sales practices, failed to pay promised rebates and did not honour promised warranties and service contracts.

Reports suggest that the suit will claim that Dell Financial Services, which is a joint venture between the computer firm and CIT Bank, attracts potential customers with the promise of interest free loans. It then denies those loans to up to 85% of applicants, offering them loans at interest rates of up to 16%.

"While even one dissatisfied customer is too many, the allegations in the filing are based upon a small fraction of Dell's consumer transactions in New York," said a Dell statement. "We are confident that our practices will be found to be fair and appropriate."

The suit seeks unspecified damages and an injunction against the allegedly offending practices. It is expected to say that when customers attempt to obtain rebates and are sent from one telephone operator to another in a "runaround" which leaves them unable to receive the promised benefit.

Dell is already under regulatory pressure, with the financial regulator the Securities and Exchange Commission investigating its accounting practices. The company's own investigation admitted that it had found errors and evidence of misconduct in its financial results.

Earlier this year Dell's chief executive Kevin Rollins resigned to be replaced by company founder Michael Dell. The company had fallen behind Hewlett-Packard in numbers of PCs shipped in the US, according to figures from research firm IDC.