Australia’s Federal Court Fines Dell $10 Million for Misleading Pricing Practices

The logo of American technology company Dell is seen at the Mobile World Congress in Barcelona, Spain, on March 2, 2023. Josep Lago/AFP via Getty Images

Australia’s Federal Court has imposed a $10 million (US$6.47 million) penalty on U.S. computer giant Dell for misleading local customers about discount prices for add-on computer monitors.

The fine was announced after the company admitted to violating Australia’s consumer laws with its pricing strategy.

In November 2022, the Australian Competition and Consumer Commission (ACCC) filed a lawsuit against Dell Australia, accusing the company of making false or misleading representations on its website about the prices of add-on monitors from August 2019 to December 2021.

According to the consumer watchdog, when consumers purchased a desktop, laptop, or notebook on the Dell website, they were offered the option to add a monitor during check-out.

These monitors were often shown with a higher price tag in strikethrough, indicating that consumers would make a considerable saving if they bought the monitor along with the other products.

However, the ACCC alleged that most of the time, Dell did not sell monitors at the “strikethrough” prices and that the add-on prices sometimes were even higher than when the monitor was bought individually.

During the court proceedings, Dell admitted all the above allegations. It also admitted to using statements such as “Total Savings”, “Includes x% off” and “Discounted Price” to mislead customers about the discounted price of the add-on monitors.

It was found that Dell sold over 5,300 monitors with overstated discounts worth over $2 million to Australian consumers.

In June, the Federal Court declared that Dell made false and misleading representations with its pricing practices.

It then ordered Dell to offer full or partial refunds and issue corrective notices to every impacted consumer.

At the time, the company agreed to compensate over 4,250 individuals.

Apart from the $10 million fine, the court asked Dell to pay $250,000 to cover part of the ACCC’s legal fees.

ACCC’s Response

Following the Federal Court’s order, ACCC commissioner Liza Carver said the penalty served as a deterrence against misleading business practices.

“This outcome sends a strong message to businesses that making false representations about prices or inflating discounts is a serious breach of consumer law and will attract substantial penalties,” she said.

“It is important that businesses are careful when advertising discount pricing to ensure they do not mislead consumers about the savings on offer.”

A Dell laptop is seen on display at the Best Buy store in Austin, Texas, on June 2, 2023. Brandon Bell/Getty Images

While a Dell spokesperson said the company was pleased to see the lawsuit conclude, she attributed the whole matter to an “error” on Dell’s website.

“As we acknowledged in November 2022, when the ACCC commenced these proceedings, due to an error in Dell’s pricing processes, there was incorrect information displayed on our website about the pricing and savings associated with certain monitors,” the spokesperson said in comments obtained by AAP.

“We have fully co-operated with the ACCC throughout their investigation, have been working with impacted customers to provide appropriate refunds plus interest and are taking steps to improve our pricing processes to ensure this sort of error does not happen again.”

Dell to Stop Using Chinese-Made Chips

Meanwhile, Dell has announced it intends to exclude Chinese-made chips from its products by 2024.

The company also told its suppliers to reduce the number of components produced in China in their deliveries and asked many of them to expand production capacity in other countries, such as Vietnam.

The move was said to be Dell’s strategy to deal with escalated tension between the United States and the Chinese communist regime, which saw Chinese memory chipmaker YMTC and 21 other Chinese high-tech companies added to a trade blacklist in December 2022.