Dell is being sued by the State of New York for allegedly misleading customers on pricing, offering poor service, passing off second hand parts as new and encouraging users to break their own warranty agreements.

In a damning indictment Dell has been accused of using "bait and switch" financing tactics by advertising "no interest" and/or "no payment" machines and then refusing them to the vast majority of customers, even those with very good credit scores.

The company then passed the customer over to its Dell Financial Services arm which offered payment plans with interest rates of up to 20 per cent.

Dell is also accused of providing very poor customer service to those who bought expensive service contracts.

In several cases the company allegedly encouraged users to void their warranties by removing the PC's cover and removing and reinstalling parts.

New York Attorney General Andrew Cuomo said: "At Dell, customer service means no service at all. Dell's consumers were intentionally misled, and they had to pay for that privilege. 

"I hope this lawsuit sends a message to companies large and small that delivering a product is simply not enough. The promises they make must be delivered as well."

For those who purchased on-site warranties the suit alleges that service reps repeatedly failed to turn up on time, that the free helpline was seldom answered and that second-hand parts were used to effect repairs.

Dell Financial Services is also accused of making illegal deductions from customer accounts, failing to credit money when it was owed and harassing customers.

In filing the lawsuit, Cuomo is seeking to require Dell and Dell Financial Services to pay restitution to aggrieved consumers and civil penalties, and adopt measures to ensure that they do not engage in deceptive, illegal and fraudulent practices in the future.