Taiwan hits Dell with $30k fine in pricing saga
Authorities threaten more to come
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. ®
COMMENTS
So..
How is this any different from when a price tag at a supermarket loses a digit for whatever reason?
re 'merikin perspective
"Dear Customer,
This is to notify you that, regrettably, we need to cancel your recent DELL order for a Dell G2410 24in Wide Green Flat Panel Monitor. Due to our error, the system was shown online at an incorrect price.
As specifically noted on our web pages, catalogs, ads, and customer order documentation, Dell reserves the right to cancel any orders resulting from such errors."
That's all me and thousands of others got after purchasing an LCD on sale for $148 which was on sale for $188 the previous week.
That's how Dell always handles this in the US.
Payment? What payment?
"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."
Is there any proof that the customers actually PAID for the items? Or, put into the language of Mike 61's comment above, is there any proof that "[Dell] accepted payment for it at the price advertised"? No article I have read on this issue has claimed that Dell actually charged anybody's credit card. Being given a credit card number is not the same as accepting payment. The customers expressed an interest in a product and they OFFERED to pay the advertised price. Unless Dell actually created capture transactions with a CC processor, then there were no payments accepted. Period. No payment transaction means no sale and no purchase.
As for the comments about bait-and-switch, advertising fraud, etc, you might want to read up on various laws a bit more. There are many places in which companies are not held accountable for such typographical errors. Specifically, to be held accountable, a customer must reasonably believe that the advertised price is valid. In these two cases, the customers could not reasonably believe that Dell would give a 90% discount on a monitor and a 70% discount on a notebook.
Loss of revenue my hairy ass
They never would have sold that many monitors in that amount of time if the pricing was correct. Sensationalist journalism at its worst.
They will have made a slight loss on each monitor but I cannot see it being that huge. maybe $20 a piece which is mightily annoying I am sure. They can deduct it from their taxes and so I imagine the hit is even less.
Suck it up dell. That another 30k down the pan for being so stupid as to not honour your deal. Want to lose more? Hire some expensive lawyers to argue your flawed case.
Numbskulls.
Just suck it up
Send the parts out. The only chance Dell really has it to threaten to pull operations and cut ties with Taiwan based suppliers. The question is, are they a big enough fish for Taiwan to really care and can they afford the impact it will have in China as well. Dell needs to remember that many of the Chinese companies have ties across the strait and there is a good chance that a loss of face in Taiwan will have the same result in China.
Their best bet is to try to soften the blow by pulling the old infomercial / eBay tactic...
19" monitor just three easy payments of $5* [buy it now for $15*]! Be sure to act soon! Call now and receive a FREE foldable corrugated cellulose fiber storage container! Supplies are limited so have your credit card ready!
*shipping & handling charges of $1200 not included.
