Disaster for PC industry's number two.
A court in New York has found Dell guilty of false advertising and fraud.
The company engaged in abusive debt collection practices, misled consumers about the financing terms for which they had qualified and failed to provide consumers with promised rebates, according to court papers.
The case arose after hundreds of complaints about Dell and its finance arm Dell Financial Services.
Dell now faces the prospect of a huge damages claim, and New York Attorney General Andrew Cuomo has asked consumers to register their complaints at a special website so that damages can be assessed.
"Huge companies like Dell cannot continue to walk all over their customers and get away with it," said Cuomo.
"All consumers who were left on hold for hours, promised 'onsite' repair services only to be pressured to take apart their computers themselves, and subjected to numerous other negligent and abusive practices should register their complaints at our website so we can ensure the Dell is held accountable for its failed promises."
The court found that Dell and Dell Financial Services had deceived consumers as to the real cost of their PCs.
The company offered complex financing schemes, sold people onsite repair warranties and then refused to honour them and left customers waiting for literally hours on the Dell helpline, according to court papers.
The 26-page summation is a damning indictment of the two companies' practices, and represents a major image problem for Dell as well as a potentially huge damages bill.
Justice Joseph C. Teresi said in his decision: "Dell has engaged in repeated misleading, deceptive and unlawful business conduct, including false and deceptive advertising of financing promotions and the terms of warranties, fraudulent, misleading and deceptive practices in credit financing and failure to provide warranty service and rebates."
Dell has not decided whether it will appeal, and has blamed the situation on a small number of customer complaints.