Dell Settles Class Action Over Financing Practices

Market Wire, October, 2006

Counsel for plaintiffs announced today that a federal court in Tacoma, Washington granted final approval to a settlement in a class action lawsuit against Dell, Inc., Dell Financial Services, L.P., and CIT Bank. The class action was filed on behalf of certain Dell customers nationwide. The class action alleged that the defendants' practices caused consumers to incur excess finance charges and late fees. Under the terms of the settlement, the defendants will pay up to $17 million to settle claims by customers who bought computers and/or related services and products from Dell and financed their purchases with Dell Financial Services. Dell and Dell Financial Services have also agreed to modify some of their sales and financing practices.

"This settlement will provide substantial benefits to past, current, and future Dell customers," said Steven A. Skalet of Mehri & Skalet, one of the law firms representing the plaintiffs. The agreement settled three pending class actions and one unfiled class action in which plaintiffs alleged that consumers were enticed into financing their purchases by promotional offers such as "90 Days Same as Cash," but were not informed when they were approved for credit lines that lacked such promotional features. The actions also alleged that the defendants failed to adequately disclose the terms and conditions associated with its "Dell Preferred Account" lines of credit. As a result, plaintiffs alleged that customers accrued unexpected interest and late charges. All three defendants deny that consumers were misled or that they engaged in any wrongdoing, but agreed to the settlement in order to avoid the cost and uncertainty of continued litigation.

Under the terms of the settlement, eligible class members may apply to receive a refund of 75.95% of the estimated interest paid during sixty days following the initial purchase. Class members who paid a late payment fee may receive a refund of 75.95% of the average late fee paid by class members. Dell Financial Services will also make changes to the way it advertises its promotional financing offers and communicates with consumers who receive lines of credit. "The financial settlement, as well as Dell's promise to change certain sales practices, is in Dell's customers' interests in the long run," said Jeffrey Friedman of Lerach Coughlin Stoia Geller Rudman & Robbins LLP.

The settlement will bring to an end nearly three years of investigation, negotiation, and litigation. "This settlement puts money back in the pockets of Dell customers and we are very pleased with this result," stated Eric Chaffin of Seeger Weiss LLP.

Counsel for the plaintiffs include Lerach Coughlin Stoia Geller Rudman & Robbins, LLP ( www.lerachlaw.com ); Mehri & Skalet, PLLC ( www.findjustice.com ); Seeger Weiss LLP ( www.seegerweiss.com ); Trial Lawyers for Public Justice ( www.tlpj.org ); Hagens Berman Sobol Shapiro LLP ( www.hagens-berman.com ); and the Law Office of Jeffrey Keller. The case is Watson v. Dell, Inc., Docket No. C-05-5200-RBL and was filed in the United States District Court for the Western District of Washington on March 21, 2005.

Contact: Stacy King 202-822-5100 Email Contact