Leasecomm strikes $24 million settlement with FTC
June 5, 2003
WASHINGTON - Once a major lender to independent alarm dealers, Leasecomm has agreed to drop $24 million worth of current and pending lawsuits against consumers that contracted with Leasecomm for "get rich quick" 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 that language in the contracts waived the consumers' right to defend themselves and gave Leasecomm the right to pursue litigation again 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 Leasecomm's operations in the security industry, according to Randy Brook, senior attorney with the FTC on the Leasecomm case, because the "get rich quick" type of contracts would have been structured differently than the lending agreements with established alarm dealers, he said.
Leasecomm'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 "virtual terminal" for example, FTC officials said.
In a statement, Richard Latour, president and chief executive officer of MicroFinancial, Leasecomm's parent company, said that many of the issues raised were not due to the activities of Leasecomm but to different vendors the company worked with. The company is taking steps to monitor its vendors, including the filing of periodic reports about the vendors for two years.