The New York Attorney General's office has filed a lawsuit against a Manhattan-based credit card leasing equipment company for allegedly misleading customers and aggressively pursuing judgments against clients that violated contract terms.
Attorney General Eric Schneiderman filed suit against Northern Leasing and several other connected companies alleging that they bilked small business owners who signed leases for equipment that would allow them to take credit cards at their stores.
"It's a massive scam," said Jane Azia, the chief of the Attorney General's consumer frauds and protection bureau.
Northern Leasing has denied the allegations in the case.
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The suit comes after the I-Team revealed that Northern Leasing, which had settled with the AG's office in 2012 after being accused of stealing money from customers' bank accounts, had filed more than 2,300 civil claims in 2015. Many of those came against customers who say they were misled about the service.
One, Tricia Lowther, said she was unable to expand her school in Brooklyn because of credit problems rooted in part from a lease she signed in 2008 for faulty equipment from Northen Leasing.
Because the equipment didn't work Lowther said she stopped paying the nonrefundable 2-year contract and was sued by the company for $1,875. The firm won the default judgement and said she never complained about the equipment.
The suit filed Tuesday by the AG's office seems to indicate Lowther's case wasn't unique. Northern Leasing was accused in the filing of misrepresenting the terms of its leases to make it appear that clients would save money. The suit also alleges that company also claimed the leases could be canceled at any time, and that they overcharged.
In some cases, the suit alleges, customers said they never signed leases or that they were forged or later altered.
"These leases were procured by misrepresentation and fraud," said Azia. "They lied to customers about how much money they would save, they lied to customers they could cancel leases at any time. They overcharged enormously."
As part of the suit, Schneiderman's office is asking Northern Leasing to stop collecting any money from clients and for thousands of judgments levied against the business owners to be vacated.