Leasecomm Corporation
Settlement Questions and Answers
for Financing of a Business Opportunity or Virtual Terminal
(Updated: 06/20/2003 )
This information sheet is for people who purchased a "business opportunity" or "virtual terminal." (See Q #4 for definitions.) If you purchased equipment like credit card swiping machines ("POS terminals"), business signs, etc., for an existing business, please see the Settlement Information for Equipment Not Part of a Business Opportunity.
Q #1: Does the settlement apply to every state?
Yes. All FTC settlements are nationwide. The settlements with eight state agencies will also govern Leasecomm's conduct throughout the United States and contain some provisions not in the FTC case. See Q #8 below.
The state settlements are between Leasecomm and the Attorneys General of the States of Massachusetts, Florida, Illinois, Texas, North Dakota, North Carolina, Kansas, and the District Attorney of Ventura County, California. For further information about the state settlements with Leasecomm, visit www.ago.state.ma.us, www.myfloridalegal.com, and www.oag.state.tx.us.
A copy of the FTC judgment, together with other information, can be viewed at: www.ftc.gov/ro/leasecomm. Information at this site is updated periodically
Q #2: Who benefits from the Leasecomm settlement and what are the benefits?
Everyone with an ongoing Leasecomm finance contract or lease will be affected in some way by these judgments because they prohibit Leasecomm from enforcing certain contract provisions. How much you may benefit from these changes, if at all, depends on the product you leased and whether Leasecomm claims you still owe it some money. Many people with Leasecomm court judgments against them and currently subject to debt collection may also benefit.
Q #3: Leasecomm previously obtained a judgment against me and claims I still owe it money. How will this settlement help me?
If the product was leased to you as part of your purchasing a business opportunity, Leasecomm must cease further collections and file a Satisfaction of Judgment in the court where it originally got the judgment against you. The cancellation of collections should be automatic if the product you leased was a virtual terminal or software license. In addition, Leasecomm must notify the three major credit reporting agencies that you no longer owe any money to Leasecomm.
IMPORTANT NOTE: If you leased a different product from those listed above, but did so as part of purchasing a business opportunity, you are also eligible to have your judgment cancelled. For example, you may have leased a credit-card swiping machine or computer. In this case, you will have to write to Leasecomm and demonstrate that you leased the product as part of a business opportunity, rather than for your existing business. (See Q #5 below.)
Q #4: What do the phrases "business opportunity," "virtual terminal" and "Satisfaction of Judgment" mean?
A "business opportunity" is a purported profit-making venture, seminar, or promotion (such as multilevel marketing programs, pyramid scheme, buyers' club, coupon-clipping program, or investment opportunity) that seeks to induce customer-lessees to make money through business or investment.
A "virtual terminal" is any intangible product, software, license, or right to access or use services, which enable customer-lessees to process credit-card transactions or account-debits on-line through the Internet.
A "Satisfaction of Judgment" is a document filed in a court indicating that a judgment has been satisfied and that no further payment on the judgment is due.
Q #5: What if a judgment was obtained against me as a result of leasing a virtual terminal or business opportunity, but
Leasecomm has not provided me with a Satisfaction of Judgment?
If you leased a virtual terminal or a business opportunity, and you do not receive a Satisfaction of Judgment from Leasecomm by July10, 2003, you should contact Leasecomm directly at: Leasecomm Corporation, Attention: Cheri Brown, 10M Commerce Way, Woburn, Massachusetts 01801-1028 and provide evidence that you leased either a virtual terminal or business opportunity - include a copy of your lease agreement and any marketing materials that prompted you to enter the business opportunity. To ensure Leasecomm's receipt of your correspondence, send your letter with attachments by certified mail return receipt requested.
Q #6: What if Leasecomm filed a collection suit against me in a Massachusetts court and that matter is currently pending,
that is, no judgment has entered?
If Leasecomm has filed a lawsuit against you personally, or against you as an individual guarantor of a corporation, and that case is pending in a Massachusetts court, Leasecomm must provide you with the opportunity to have the dispute heard in the state and county where you live, or in the county where you originally signed the lease contract. Leasecomm's obligation to do this applies regardless of the type of product leased.
Leasecomm must provide you with notice of this opportunity and permit you additional time to defend the relocated lawsuit. You should receive this notice by July 10, 2003. Leasecomm or the court will provide copies of the legal papers needed to cause the transfer to the new court. If you do not complete the papers, the case will not be transferred and Leasecomm may proceed with the suit where it is currently pending. Leasecomm may not charge you for any fees associated with the transfer.
We also recommend you raise any dispute directly with Leasecomm. The contact address is Leasecomm Corporation, Attention: Cheri Brown, 10M Commerce Way, Woburn, Massachusetts 01801-1028. The state settlements with Leasecomm oblige it to investigate any complaints about the business practices of Leasecomm or any of its dealers.
Q #7: What additional remedies does the settlement provide to current and future customer-lessees of Leasecomm?
The settlement prohibits Leasecomm from using or enforcing two provisions that have appeared in its lease contracts. A third contract provision may not be enforceable, depending on specific facts.
1. With respect to all pending lawsuits and lease agreements with individuals, Leasecomm is now prohibited from enforcing provisions in its contracts which stated that the lessee may not raise any defenses, offsets, or counterclaims against Leasecomm in the event Leasecomm sues to collect money allegedly owed under the lease. In addition, Leasecomm must remove this language from future contracts.
NOTE REGARDING POTENTIAL DEFENSES: You may or may not have lawful defenses or counterclaims against Leasecomm. You may wish to consult a private lawyer for advice regarding any defenses or counterclaims you may have.
2. Leasecomm is now prohibited from enforcing provisions in its contracts which stated that any lawsuit against the customer (or person guarantying the contract) could be brought in Massachusetts. This means that if Leasecomm files a lawsuit against an individual for nonpayment, Leasecomm must file that suit in the person's county of residence or the county where the contract was signed, instead of in a Massachusetts court.
3. Your contract with Leasecomm may provide for the automatic debiting of lease payments from a bank account. If you are currently having payments automatically debited from a personal bank account to pay Leasecomm, you now have the right to discontinue this and make your payments directly to Leasecomm. If you wish to discontinue the automatic debits, you must notify Leasecomm at Leasecomm Corporation, Attention: Cheri Brown, 10M Commerce Way, Woburn, Massachusetts 01801-1028 and indicate how you want to make future payments. Leasecomm is required to make this change if the automatic deductions come from a personal account, but not if they come from a business account. You will not be charged for making this change unless your lease contract specifically provides that such a charge will apply.
Q #8: I entered into a lease contract with Leasecomm, I am currently making payments under the lease, and have no dispute
with Leasecomm. Do the FTC or the state settlements settlement provide me with any new rights?
The most important rights are explained above under Q #7. In addition, the state settlements require Leasecomm to notify you of certain rights before your lease term runs out. Leasecomm must notify you that you may either: (1) terminate the lease contract and return the equipment, (2) purchase the equipment, or (3) renew the contract on a month-to-month basis. Leasecomm must also provide these options under all future lease contracts where personal liability may attach under the contract.
Q #9: How can I protect my interests when entering into a business contract?
Always read the terms and conditions of any contract carefully before signing the contract. Never rely on a sales representative to summarize the terms of the contract for you, or to pressure you into signing the contract before you have had an opportunity to review all the terms carefully. If you do not understand the contract's terms, you should consult an experienced business attorney for advice. Finally, always remember the golden rule: If a deal sounds too good to be true, it probably is.
Q #10: What can I do about my credit problems as a result of my dispute with Leasecomm?
This depends on your current status.
a. If you get a Satisfaction of Judgment, the credit bureaus will automatically record this fact in their files when they next obtain information from the court where the judgment was entered. You can also send a copy to the credit bureau or someone you are asking for credit as proof that you no longer owe money. This doesn't wipe out the fact that there was a judgment, but it does establish that the judgment has been satisfied and the dispute resolved. You may also dispute the credit report, as described below in Q #11.
b. If there is no judgment but you are in collections, the first thing to do is to raise any dispute directly with Leasecomm. The contact address is Leasecomm Corporation, Attention: Cheri Brown, 10M Commerce Way, Woburn, Massachusetts 01801-1028. The state settlements with Leasecomm oblige it to investigate any complaints about the business practices of Leasecomm or any of its dealers. If you can resolve the dispute or convince Leasecomm that you were defrauded and should not have to pay, this could improve your credit rating.
c. If you paid off a judgment or still have late payments giving you credit problems, you could dispute the debt with the credit bureau on the basis that you believe you were defrauded or for whatever reason you think appropriate. Note that the FTC cannot take a position about your particular dispute. Each case depends on its own facts. Also, in settling their cases against Leasecomm, neither the FTC nor the state agencies made any determination that Leasecomm violated the law.
Q #11: Is there anything I can send a credit bureau or potential creditor to help dispute or overcome the negative information
about my Leasecomm debt?
The FTC staff has prepared a general letter summarizing the case against Leasecomm for individuals to send to creditors or credit bureaus. This letter will not say anything about the facts of your case, but may make it easier to explain your dispute. It will still be up to the creditor to decide whether to give you financing, and the credit bureau to decide how your dispute affects your credit rating. We cannot represent you in presenting your dispute. You also have the right to have a brief statement added to your credit file about why you dispute the Leasecomm debt. This statement will be shown to creditors who get copies of your credit bureau file. If you need a copy of this form letter, please email the FTC at the email address below.
MORE QUESTIONS? Email the FTC staff at leasecomm@ftc.gov. Please be specific as to the type of product financed (business opportunity, swiping machine, etc.) and whom you purchased the product from. Also let us know your current status (still paying, judgment, debt collection but no judgment, paid off, etc.), Leasecomm account number, and amount owing.