Dell Admits Breaching Fair Trading Act

In a settlement with the Commerce Commission, Dell New Zealand Limited has admitted breaching the Fair Trading Act in relation to a number of different representations made about its computers and computer monitors.

Dell New Zealand had come to the Commission's attention as a result of a number of different complaints from members of the public, including issues relating to computer monitors and misrepresentations about the availability of computers.

In 2006, Dell New Zealand marketed its 2007WFP computer monitors as suitable for computer gaming and high end graphics, when they in fact had an inherent issue known as 'colour banding', where colours are distorted in computer graphics. Despite being aware there was an issue with the monitors, for a six week period Dell New Zealand not only failed to notify consumers but replaced returned monitors with monitors that had the same banding issues.

"Customers rely on accurate information to make informed choices," Stuart Wallace, Acting Director of the Commission's Fair Trading Branch said. "Businesses need to ensure that known problems are fixed before goods are distributed. Once a business becomes aware of an issue with one of its products, it should make every effort not only to rectify the problem, but also to advise its customers."

Dell has now eliminated the colour banding issue. Any consumer who believes that their Dell monitor has issues with colour banding is encouraged to contact Dell on 0800 33 55 41.
In a separate issue, Dell New Zealand admitted it had made misleading representations in print and television advertising where it claimed that its products could not be purchased in shops when in fact, at the time of the advertising, Dell products were available at The Warehouse.

Dell New Zealand also admitted breaching the Fair Trading Act in relation to offering a 'free' upgrade to Windows Vista when a $40 delivery fee was required to obtain the upgrade, and promoting an online competition to win a laptop that was only available to Australian customers.

Mr Wallace said that in the settlement with the Commission, Dell New Zealand has agreed to ensure future advertising sets out in clear and unambiguous terms any existing faults with products, the terms and conditions of any of its competitions and the availability of its products.

Dell New Zealand's behaviour demonstrated a serious breakdown in its internal procedures for ensuring compliance with consumer protection legislation, Mr Wallace said. "As part of the settlement, Dell has agreed to undertake a comprehensive review of its compliance programmes to avoid issues such as these in the future."

"The Commission will be closely monitoring any representations made by Dell New Zealand to customers in the future, and won't hesitate to take further action if Dell New Zealand fails to improve its compliance procedures," he said.
Background

Dell New Zealand Dell New Zealand is a New Zealand registered company, wholly owned by Dell International Incorporated and Dell Australia Pty Limited. Dell New Zealand is a supplier and distributor of computers and related accessories in New Zealand, which are marketed directly to the public by means of website and television advertising and promotional literature.

The Fair Trading Act If the Commission decides that the labelling or representations made are likely to have breached the Act, it can take a range of enforcement actions including issuing a warning, entering into a settlement on the basis of undertakings or taking court action either through the criminal or civil jurisdictions. Court penalties for breaching the Act can include fines of up to $200,000 for a company and $60,000 for an individual. Only the courts can decide if a representation has breached the Act.

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