"Business Opportunity Financing" Company Settles with FTC and States

May 29, 2003

Leasecomm, a wholly-owned operating subsidiary of MicroFinancial Incorporated, based in suburban Boston, Massachusetts, has just reached a settlement with the Federal Trade Commission over predatory practices which victimized consumers in MLMs, internet mall and other schemes. The company, dubbed a "business opportunity lender" by the FTC,

"allegedly used shady agents, deceptive contracts, and false claims to target thousands of would-be entrepreneurs . . . The law enforcement agencies charged that Leasecomm financed the purchase of business opportunities such as work-at-home operations using business opportunity sellers as its agents. "

According to Howard Beales, the FTC's Director of Consumer Protection,

"Leasecomm used sellers of highly suspect business opportunities to sell its financing, and then claimed it had no responsibility for their deception. "

Leasecomm's scheme, according to the FTC, involved the financing of internet malls and MLMs, as well as other "business opportunities." The consumer would sign a "lease" involving payback of $3,000 - $4000 which covered a credit card or virtual terminal. If the customer defaulted, Leasecomm would sue them in Massachusetts and usually obtain a default judgment.

Leasecomm has agreed to settle charges with the FTC and with Massachusetts, Florida, Illinois, Kansas, North Carolina, Texas and North Dakota, as well as Ventura County, California.

The settlement requires that Leasecomm:

• vacate and cease collections on $24 million in court judgments
• give 2,000 consumers currently involved in lawsuits with Leasecomm the option to have those suits conducted locally
• give another payment option to consumers who were illegally required to pay Leasecomm by means of electronic funds transfers
• require Leasecomm to vacate lawsuits now pending which were filed in the wrong forum, and correct consumers' credit records
• require that if Leasecomm sues, it must do so 'where the customer resides or signed the contract.'
• require disclosure of material facts about its contracts
• bar misrepresentations about its contracts.

What Does This Mean?

If you were involved in an internet mall or an MLM and you signed a contract with Leasecomm, you should be receiving some correspondence shortly to clarify your position with them. If you were involved in Trek Alliance, among other MLMs, you may have been fraudulently induced into signing such a contract.