Has Dell's Supply Chain Management Turned Into Bait-and-Switch?

Manufacturers will be closely watching the outcome of a bait-and-switch lawsuit filed against Dell Inc. Dell has long been the uncontested leader in supply chain management and this suit has the potential to raise serious challenges to Dell's management practices.

Details of a class action suit against Dell Inc., originally filed on Feb. 14, 2005 for a false advertising practice known as bait-and-switch, became available Dec. 2. Lerach Coughlin Stoia Geller Rudman & Robbins LLP filed a class action suit in Superior Court for San Francisco County on behalf of two named Dell customers and others charging Dell with deliberately misleading customers.

The lawsuit says that Dell Inc. controls all of its manufacturing, marketing, advertising and sales orders and that it deliberately advertises computers and other electronic products at attractive low prices and then systematically substitutes higher-priced products or lower quality equipment for those it advertised to customers, or increases the purchase price without notice to buyers.

With regard to the specific charges, the lawsuit alleges that Dell, Dell Financial Services (DFS) and CIT Bank (joint owner of DFS with Dell) violated California's Consumer Legal Remedies Act (CLRA) by false advertising and bait-and-switch practices; fraud and deceit in its sales and advertising representations; breach of contract by unilaterally modifying terms and conditions of sales and financing; violating the California Business and Professions Code by knowingly distributing false and misleading information; violating the Unruh Act with unlawful retail installment contracts; engaging in deceptive practices in its financing programs; and entering into unlawful contracts and charging excessive finance charges.

To view a copy of the complaint visit: http://www.lerachlaw.com/cases/dell/complaint.pdf

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