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Dell New Zealand Limited has admitted breaches of the Fair Trading Act over claims it made about its computers and monitors.
The company came to the attention of the Commerce Commission after a number of different complains from the public.
Problems included issues regarding monitors and misrepresentations about the availability of machines.
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 stressed that only a small number of complaints had been made to the commission.
"While even one dissatisfied customer is too many, the cases referred to in the settlement with the New Zealand Commerce Commission relate to a very small number of Dell's consumer transactions in New Zealand," it said in a statement.
"We remain committed to providing the highest quality products - all the time. We are also committed to providing a positive experience to all of our customers every day, including publishing accurate advertising."
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 admitted it had made misleading representations in print and television advertising by claiming that products could not be purchased in shops when in fact, at the time of the advertising, Dell computers 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.
Dell New Zealand's behaviour demonstrated a serious breakdown in its internal procedures for ensuring compliance with consumer protection legislation, Mr Wallace said.
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.
"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.
