Leasecomm Corporation
Settlement Questions and Answers
for Financing of Equipment Not Part of a Business Opportunity
This information sheet is for people who purchased equipment like credit card swiping machines ("POS terminals"), business signs, etc., for an existing business. While the settlement does apply to you, the benefits are much more limited than if you purchased 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: What are the benefits for people who leased equipment for an existing business?
The principal change for people who leased or purchased equipment is that if there is a dispute, Leasecomm cannot sue them in Massachusetts. Other benefits (in the state settlements) will limit collection fees and limit automatic lease renewals. See Q #7 and #8 below.
Q #3: My only complaint is that I paid too much for my equipment. Does the settlement help me?
The settlements focus on the problems created by misleading sales of business opportunities. They do not consider whether selling a piece of equipment at a high price without any other deception would be illegal. Nor do they consider what defenses, if any, you might have to a lawsuit filed by Leasecomm where your only dispute is a high price. If this is your situation, we recommend you consult an attorney to see what rights you may have.
We also recommend you complain directly to Leasecomm to try to resolve any dispute. The contact address is Leasecomm Corporation, Attention: Cheri Brown, 10M Commerce Way, Woburn, Massachusetts 01801-1028. If you cannot resolve the matter informally, this settlement ensures that Leasecomm cannot sue you in a distant court.
Q #4: Leasecomm previously obtained a judgment against me and claims I still owe it money. How will this settlement
help me?
If the product was not leased to you as part of your purchasing a business opportunity, the settlement will not help you. If it was part of a business opportunity, please see the Questions and Answers for Business Opportunity Purchasers. If the case is still in court in Massachusetts, see Q #6 below.
Q #5: What do the phrases "business opportunity"and "virtual terminal" mean?
A "business opportunity" is a purported profit-making venture, seminar, or promotion (such as a multilevel marketing program, 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, that enables customer-lessees to process credit-card transactions or account-debits on-line through the Internet.
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. 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.
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 that 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. The answer to the question about potential defenses is more complex if you leased equipment for an existing business.
2. Leasecomm is now prohibited from enforcing provisions in its contracts that 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 settlement or the state settlements 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 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 dealer. 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.
b. 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.
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.