Mail-order sleaze
Last week, the Federal Trade Commission stuck Dell Computer Corp. with an $800,000 fine to settle a 3-year-old complaint. Dell's offense: The company was selling software that it did not have in house.
Oh my!
Good thing that I'm not the FTC's commissioner because I would have cut the mail-order mavens from Texas a break. Dell hates the mail-order moniker -- it prefers the term, "direct channel vendor" -- but the fine was the biggest ever levied against a computer marker for violating the Mail Order Rule.
In 1995, Dell advertised a software suite as part of a hardware-software bundle it sold. But a series of unrelated problems conspired to delay the issuance of a CD-ROM containing the software. The company issued coupons to customers of its Dimension PC line, promising to deliver the software when it became available.
Dell compounded the problem by failing to offer customers a chance to cancel their orders and get their money back. The company now says this kind of screw-up could never happen again. Take them at their word. Unlike a lot of mail-order companies where the word "scruples" does not figure anywhere in the general lexicon, Dell does not fit the profile of cyber-carpetbagger. At worst, you could convict Dell for ineptness. Is that such a big crime?
For whatever reason, the FTC decided to make an example out of the company. The announcement was worth a headline or two and that was that.
But if the investigators really wanted to earn their paychecks, I suggest they crack open some computer magazines and cold-call a few of the folks who advertise el-cheapo PCs. If they do, the feds will find that more than a few mail-order computer companies have not received the message that truth in advertising does not mean they can get way with small fibs, half-truths and outright lies.
The real scandal is that bait-and-switch is alive and well, and no regulator is laying a glove on these guys. In the trade, they call it "upselling." The bare-boned boxes that sell for less than $1,000 do not leave a lot of profit margin for the seller. So the message to the order-takers operating the phones is unambiguous: Convince the suckers to spend more money.
And they do.
The vast majority of the sub-$1,000 systems wind up in homes, not businesses. The odds are that technical novices like my sister, the school teacher, will wind up calling about the machines -- a more tempting target to upsell than, say, the head of IT at ConAgra.
"You had some of that, but back in my time, the big issue between vendors was over performance claims," said Art Lazere, the founder of Northgate Computer, which was a mail-order power in the late 1980s and early 1990s.
But after spending a good portion of two days in the last week phoning sundry computer outfits about the sub-$1,000 systems they advertise, I'm sorry to report that the bait-and-switch mentality has not died out with the passage of time.
Here's a snippet of one conversation I had with one mail-order maker. Sorry, but the names and addresses of the not-so-innocent have been withheld in order to avoid a lawsuit just before I go on vacation.
Me: "So, I'd like to get that $850 system you advertise."
Sleazeball: "Well, the ones you see under $1,000 aren't very good. You might want to consider some of the other systems we offer."
Me: "Well, I want to use it at home for me and the kids." (I don't have any kids, but hey, what the heck.) "How much do you think I can get away with?"
Sleazeball: "How much do you know about computers?"
Me: "Not very much. But my office plans to get them real soon."
Sleazeball: "We've got a really good machine for $2,300, shipping and handling included."
Me: "Besides the price, what's the difference?"
Sleazeball: "You see, everything on the sub-$1,000 computers is integrated. But on the better ones, everything is plug and play."
Me: "Oh, and that's good?"
Sleazeball: "Yeah, yeah, very good. Much better."
And so on and so forth -- you get the general idea.
It is not an accidental fact of history than many of the early mail-order makers who earned unsavory reputations for less-than-honorable behavior have since fallen by the wayside. But if Uncle Sam was really on the ball, the hired help in the nation's capital would help push a few more of these forgettable figures into the dustbin of history.