Class Action Lawsuit Accusing Dell of Improper Billing Can Proceed

Class Action Lawsuit Accusing Dell of Improper Billing Can Proceed

By Anne Bucher

On Thursday, September 12, a New York federal judge denied a motion by Dell Financial Services LLC (DFS) to dismiss a class action lawsuit that accused the company of sending billing statements to the wrong addresses, causing customers’ credit ratings to drop.

The class action lawsuit was filed by Belsito Communications Inc., which held a contract with DFS. The company alleged that DFS’ failure to send bills for a $6,500 laptop to the correct address caused KeyBank NA to suspend its business line of credit. This suspension resulted in the loss of a $75,000 investment in one of its news publications.

U.S. District Judge Cathy Seibel removed DFS’ parent company, Dell Inc., several Dell subsidiaries and collection agency ARS National Services Inc. as defendants in the class action lawsuit, finding that Belsito provided no evidence to suggest that they were involved in DFS’ actions.

When Belsito purchased the laptop from Dell in October 2010, it confirmed its current contact information with a Dell representative, according to the class action lawsuit. However, DFS mailed the billing statements to an old Belsito address that had not been in use for more than five years. Belsito also alleges that the charges were applied prematurely because the company had purchased the laptop under a deal that required no payments for six months.

According to the Dell class action lawsuit, Belsito President Joseph P. Belsito searched an online search and discovered that DFS had systematically sent billing statements to incorrect addresses. Most of these addresses had never been authorized by the customers. The class action lawsuit alleges that the problem may be caused by a glitch in DFS’ software.

Belsito was unaware that the billing statements had been sent to the wrong address as DFS also had the incorrect phone number for the company. According to the class action lawsuit, Belsito became aware of the problem when KeyBank contacted the company to inform it that it would withdraw a $50,000 line of credit “because of a ‘business report derogatory rating.’” Belsito learned that DFS had reported it to Equifax, a national credit reporting bureau, in attempt to “charge off” the account. Belsito tried unsuccessfully to have the “charge off” removed by Equifax. Belsito also tried to explain to DFS why the “charge off” was improper, but DFS representatives failed to take any action to correct the error.

Judge Siebel found that Belsito had adequately argued that DFS breached its contract by prematurely billing for the laptop and by sending the bills to the wrong address. She rejected DFS’ argument that Belsito failed to uphold its end of the contract by not making payments on the laptop.

“Although it is less clear that the plaintiff has plausibly alleged that it was deprived of the fruits of the contract – to the contrary, it seems to have been using the laptop computer without having paid anything – nevertheless it arguably was deprived of the fruits of the contract via the damage to its business from the false report,” she said in her decision to allow the class action lawsuit to proceed.

Belsito is represented by Kevin D. Bloom of Bloom & Bloom PC and Robert N. Isseks.

The Dell Billing Class Action Lawsuit is Belsito Communications Inc. v. Dell Inc., et al., Case No. 7:12-cv-06255, in the U.S. District Court for the Southern District of New York.

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