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Taiwan hits Dell with $30k fine in pricing saga

Authorities threaten more to come

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The hole Dell has dug for itself in Taiwan is getting deeper; the company has been fined a million Taiwan dollars (US $30,500) for its pricing cock-up and subsequent refusal to adequately compensate consumers.

Dell mistakenly priced monitors and notebooks at sub-bargain-basement prices on its online store in Taiwan on June 25, and again on July 5 (for E4300 notebooks only). Consumers, alerted by mail, tweets, and blogs, rushed to buy at the amazingly low prices - they could buy a 19-inch LCD monitor for only US$15, instead of US$148, or a Latitude E4300 notebook for US$562 instead of US$1,850.

Many Taiwanese did, with lots of people buying more than one display, before Dell corrected the prices. Some 140,000 Dell displays were reportedly sold this way, and an unrevealed number of notebooks, possibly up to 100,000.

Adding up the numbers indicates a massive possible loss of revenue by Dell Taiwan. For notebooks we can quantify a loss of up to 100,000 X (US$1,850 - US$562) meaning US$128m. On the display front Dell could be looking at 140,000 X (US$148 - US$15) meaning US$18.62m, adding up to about US$147m dollars. The clerks or programmers responsible are not going to be popular.

Customers had paid for the goods and, they said, it was a contract and Dell had a duty to deliver the bought goods at the price displayed and paid. The company disagreed, not wanting to take anything like a US$147m hit on the chin. It apologised and offered buyers of its oh-so-unexpectedly-cheap displays and notebooks small discount coupons; NT$1000 (US$30.50) for the monitor buyers and NT$3000 (US$91.50) for notebook buyers. Notebook buyers affected by the second, July 5 glitch were offered a HT$20,000 (US$610) discount coupon.

These offers were thought to be unfair, and the police, lawyers and state authorities came charging in through the door Dell had opened in the wake of complaints from outraged customers who refused the coupons.

Some customers filed complaints of fraud with the police, who froze Dell's bank account for a couple of days, a bank account which was used by Dell to pay money to its suppliers and partners.

There were a reported 1,400 complaints to the Taipei city government. It advised Dell to offer a straight 25 per cent discount on the purchase goods or to offer cash and not coupon compensation. Dell decided to make the hole it was in deeper by disagreeing.

The city authorities promptly gave it a symbolic and highly visible smack on the wrist, fining it one million Taiwan dollars (US$30,500), saying Dell was insincere in resolving the disputes. It has been given two weeks to devise a better deal and, if it doesn't, could face repeated daily fines, or simply prevented from selling anything at all online in Taiwan. Dell could also face a fine of up to NT$25m (US$762,660) if a local Fair Trade Commission investigation into its pricing practices decides they were false or misleading.

Neither Dell UK nor Dell EMEA was able to respond immediately to inquiries about the Taiwan fine. ®

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