Buyer Beware: Computer Warranty Blues

September 26th, 2009 • Related • Filed Under • by tisha

Now that two-thirds of Americans own a computer (and many share a home girl-surfing-the-internet machine) the recent settlement in New York against Dell is getting a lot of well deserved attention.

Last week, New York Attorney General Andrew Cuomo (yep, that’s the ex-governor’s son) announced a settlement with Dell regarding false and misleading warranty claims. Also included in the suit were claims that Dell practiced bait-and-switch advertising about financing and misled consumers about in-home repair.

Dell Settles for $4 Million
Dell, and their subsidiary Dell Financial Services, also agreed to change the way they do business in New York. No longer will they be able to shunt consumers off to a third world call center where users are instructed to remove the cover on their computer and do their own fixes. Dell is unfortunately no stranger to class action lawsuits. A current suit in Canada was certified for any Canadian who owns an Inspiron laptop, mirroring suits settled in the US previously.

Tip of a Very Large Iceberg
Savvy investors can see the New York decision ballooning into a continuing loss for Dell, and Dell’s stock price has fallen from a high of $17 down below $16 since the announcement. Dell settled similar claims with 47 other states earlier this year, but they remain vulnerable to class action lawsuits for specific products.

Georgia and New Hampshire have not yet settled with Dell. If you think you may qualify for the settlement in New York, you can visit www.nyagdell.com. For other states, check with the Attorney General’s Office in your state. Don’t keep quiet if you’ve been abused by other manufactures. Take the time to write your consumer protection agency and tell your horror story.

The bottom line for consumers is that manufacturers who use warranties as a marketing tool are more likely to be held accountable when those warranties fail to live up to expectations.

Market Implications
Dell’s problems mean the market for on-site computer repair remains best served by local shops. Consumers and businesses that need mission critical repair need someone they can count on, not bad advice from a call center.

Computer repair businesses can leverage the poor performance of Dell and other manufacturers by providing actual on-site repairs in a timely manner. The problem for local shops is educating consumers about costs – when they’ve been misled by the false claims of cheap manufacturer warranties. Explaining the true value and service options should become the focus of local marketing efforts.

For those companies that still wish to offer in-home repair, look for the prices to rise to reflect the actual costs of sending a technician out.

If you are looking for a way to cut your businesses costs, consider outsourcing to a call center. An inbound call center does much more than provide basic answering service level support, they can also provide sales assistance, marketing strategies, and virtual receptionist services for any sized business.