Leasecomm strikes settlement deal
WASHINGTON - Once a major lender to independent alarm dealers, Leasecomm agreed in late May to drop $24 million worth of current and pending lawsuits against consumers that contracted with Leasecomm for Ã¢â‚¬Å“get rich quickÃ¢â‚¬Â business opportunities under the terms of a settlement with the Federal Trade Commission.
Federal trade regulators pursued charges against the company in part because of language contained in contracts with consumers who purchased business opportunities from Leasecomm, such as medical billing software or multi-level marketing programs. FTC regulators said language in the contracts waived the consumersÃ¢â‚¬â„¢ right to defend themselves and gave Leasecomm the right to pursue litigation against the consumers in Massachusetts, where Leasecomm is based, rather than where the consumer lived and purchased the business opportunity from Leasecomm.
The agreement appears not to directly affect LeasecommÃ¢â‚¬â„¢s operations in the security industry, according to Randy Brook, senior attorney with the FTC on the Leasecomm case, because the Ã¢â‚¬Å“get rich quickÃ¢â‚¬Â type of contracts would have been structured differently than the lending agreements with established alarm dealers, he said.
Leasecomm Corp., through its parent company MicroFinancial, announced in mid-October it would cease to fund any new loan originations but would continue to collect on its existing portfolio of outstanding leases.
The announcement also marked a new corporate strategy for the company, which entailed a reduction in its loan business and a new focus on customers with better credit, along with the companyÃ¢â‚¬â„¢s technology and loan-servicing platform. Leasecomm had about 340 dealers in its dealer program.
LeasecommÃ¢â‚¬â„¢s contracts often required consumers, who thought they had contracted for many parts of their new business venture, such as training, website design and leads, to make payments of $3,000 to $4,000 over a three- to four-year period.
However, the contract covered only one small part of the venture, a Ã¢â‚¬Å“virtual terminalÃ¢â‚¬Â for example, FTC officials said.
In a prepared statement, Richard Latour, president and chief executive officer of MicroFinancial, said many of the issues raised were not because of the activities of Leasecomm but to different vendors with whom the company worked.
The company is taking steps to monitor its vendors, including the filing of periodic reports about the vendors for two years.