The New York Attorney General filed a significant lawsuit today seeking to vacate Northern Leasing’s judgments against small business owners and also seeking to DISSOLVE THE COMPANY.
As I was working on my budget for my business, I noticed that my Northern Leasing payment was not among my expenses in February or March.
I called customer service at Northern Leasing and the young lady who answered my call told me that it’s customary for them to suspend billing for customers who have a Better Business Bureau complaint. I asked if that meant they were going to let me out of the lease. She said no, you can’t get out of the lease. As the customer, I am still responsible for the payments.
She asked if I authorized a debit to my bank account to make up for the missing payments and late fees, and to reinstate the debits. I reminded her that I had not asked for the payments to be suspended, nor had I received any notification that they were being suspended. I only noticed them missing when I did my bookkeeping. I said I first wanted to confirm the company wasn’t considering letting me out of the lease, since I can’t use the device and no longer have the affiliated merchant processing account. She put me on hold, returned to the call and said no, Northern Leasing had no intentions of letting me out of the lease. Then she offered to remove the late fees. I accepted, and authorized the charge of $170 to make up for the two missed payments plus the current month.
I imagine if I had not noticed, or if I had not called, I would have defaulted on my agreement without knowing, and then would have been a prime target for one of Northern Leasing’s routine lawsuits against small business owners. According to court documents, many business owners don’t find out there’s been a judgment against them until they see it on their credit reports.
I received this today from the New York Better Business Bureau:
Dear Alice Foeller ,
This message is regarding Complaint ID # 11028827- Northern Leasing Systems, Inc.
Thank you for following up with BBB regarding your position in the above-mentioned dispute.
We understand you are not satisfied with the business’s response, and have noted your dissatisfaction in our files. The business provided its position in this matter and, while we regret we were unable to reach your desired resolution, the complaint has now been closed in accordance with BBB policy. Your complaint’s closing will be described as follows in the company’s BBB Business Review: “the business addressed the issues within the complaint, but the consumer remains dissatisfied.”
Please note, the text of your response may be publicly posted on BBB’s website. BBB reserves the right to not post in accordance with BBB policy, and we may edit your response to protect privacy rights and to remove inappropriate language.
We appreciate the opportunity to be of service, and sincerely hope you will contact us for pre-purchase information.
Sincerely,
Dispute Resolution Services
Complaint Analyst
So that’s the end of the road with the BBB. I’ll be checking on progress with the Attorney General’s office next.
On February 3, after rejecting Northern Leasing’s first response to my BBB complaint, I received their second response. In it, they gave me a one-time chance to buyout the lease by paying $1700 for the privilege of returning the equipment and ending the lease. So instead of paying $1700 over the course of the next two-plus years, I would be paying it all up front.
I rejected their offer, stating the following in my response:
They are asking me to pay the remaining amount on my lease all at once, at which point they will receive the equipment back and can lease it to someone else. This is a benefit to Northern Leasing, not to me. I have set up a website to explain my predicament and help others avoid this kind of predatory leasing arrangement here: www.northernleasingscam.org.
As one of my colleagues stated, “If I sign a contract that says you are allowed to murder me, that doesn’t mean you are allowed to murder me.” The contract is fundamentally unjust, unethical and requires me to pay for something I didn’t want that doesn’t work. I will not agree to pay $1700 for the privilege of returning the equipment.
I don’t believe the BBB has any mechanism for continuing the back-and-forth after two responses. I think they will marked the case closed at this point.
I have to admit I was tempted to pay the $1,700 because of the written guarantee that my lease would be terminated. There is a clause in the lease that says simply because I have completed all the payments, doesn’t mean they have to stop charging me fees. The idea of being done with this once and for all was tempting. But the fact that Northern Leasing would receive the most benefit from the transaction was inspiration for me to continue to try for a better resolution.
So, my lease agreement states that it is $49.99/month. That amount is written in a blank spot in pen. If I squint hard, the fine print after that says there is a $4.95 per month per unit Loss and Damage Waiver Fee. There is also sales tax (not stated in the lease), which I think is a little weird on a lease, but maybe applicable. It also makes reference to the $25 annual fee, which I mentioned earlier.
This, seriously, is some of the paperwork I signed. It’s quite embarrassing that I signed this. I mean, I can hardly read it.
Even with that, my monthly payment should not be $59.58. So I called today. I spoke to a nice gentleman in customer service, after only punching a couple of buttons and waiting for less than 3 minutes. Once I provided my lease number, he told me I was being charged a fee for insuring the equipment because I didn’t have the proper insurance. Oh, but I DO have the proper insurance, and already sent it in to them, I said.
That’s when Jose asked when I sent the insurance in. I said I thought it had been about a year ago. (It’s actually been nine months, I just didn’t have time to look it up.) He said, oh, well you have to renew that every year. And he asked me to email the proof of insurance to him again.
For the record, the proof of insurance is my business liability insurance, but with Northern Leasing called out separately as a Loss Payee, meaning they would be paid out first if my office burned down. You know, ahead of my LANDLORD.
I re-sent the insurance, but then I opened it and looked at it closer. The proof of coverage is for last year, and has an expiration date. I expect Northern Leasing will notice and continue to charge me the $4.95/month fee. I am requesting an updated proof of coverage from my insurance agent, and I’ll send that to them when I receive it.
Meanwhile, after looking at the section above, I consulted Section 9 for details about the annual fee and it actually says they can continue to charge me the annual fee AFTER THE LEASE ENDS.
One of the reasons merchants who want to cancel their lease with Northern Leasing (also MBF Leasing) are unable to do so is that the lease contract specifies the court venue must be in Manhattan, New York City. This makes it quite difficult for the little guy to fight the case, since he or she must deal with the expensive travel.
Recently, the New York City courts (which it has been reported have one or two courtrooms completely filled with cases generated by Northern Leasing/MBF Leasing suing its customers for failing to pay the leases) have begun dismissing lawsuits against small merchants because of the venue clause.
The latest case was dismissed January 20, on the grounds that the contract was signed in California, the merchant (defendant) is in California, and the equipment is in California.
It cites an earlier case against Northern Leasing that was also dismissed because the small merchant showed it was an undue burden to travel to New York to get his day in court.
Northern Leasing/MBF Leasing is free to bring new lawsuits against these defendants on their own turf. But now at least the business owners are able to make it to court to fight.
You can read it yourself. Northern Leasing responded by, not surprisingly, citing chapter and verse from their extremely well-worded lease that has no escape.
There’s not a word in here about customer service, except the title of the woman writing the response. Nothing about ethics or the pros and cons of charging someone for something they have never been able to use and will never use, leased to them on false pretenses.
Interestingly, the letter included a copy of the lease, which I took the opportunity to review. I am not including it here because it contains my social security number and other personal details.
Toward the bottom, there is a section where MX Merchant Services, going by yet another name in this instance, signs over the equipment to Northern Leasing. So I am paying $59/month for equipment I will never use, which did not even belong to Northern Leasing in the first place! MX Merchant Services owned the little CREDIT CARD TERMINAL I WILL NEVER USE, and plugged it in at my office, then signed me up for a 48-month lease and signed the equipment over to Northern Leasing. Which means Northern Leasing isn’t even an equipment company. They are a lease servicing company. Which would explain why they are so very good at writing leases and collecting payments!
In early January, I became very motivated to pay off all my debt, a la Dave Ramsey. So I wrote down all my debts and leases in order from smallest to largest. And there was Northern Leasing.
Even though it doesn’t make cash flow sense to pay off the lease early and return the equipment, it would be one less debt I owe, and one less payment, and it would be part of my debt demolition plan. But I REALLY don’t want to pay the full amount of the next 3+ years that I will not being using the CREDIT CARD TERMINAL I WILL NEVER USE.
I thought maybe I could negotiate a reduced cost for returning the equipment early, despite the fact that I called and asked that, and they said no.
So I went to the Better Business Bureau site and saw there were 461 complaints, AND that Northern Leasing was actually responding to them. They were probably not responding very well, since they have an F rating. But at least they were listening.
So I filed my own complaint.
It says:
Problem:
The leasing contract for the credit card processing equipment was attached to the end of another agreement with a credit card processor. The processor promised that their processing system would interface with my online accounting for my company. When I tried to use it, it did not. I called to cancel the service and was told I could cancel the processing, but not the equipment lease. So now I am paying $58 per month to lease equipment I have never used and will never use.
Desired Outcome:
I would like to return the equipment, which is unused, and discontinue paying the lease amount. Alternately, I would like a reduced payoff amount to terminate the lease and return the equipment. Currently my lease payoff amount is approximately $1923.40, which is fairly ridiculous considering the value of the equipment on the open market, and its value to me, which is zero since it doesn’t work with my system. I should have been suspicious when the salesman was so eager to get my bank account information and rushed to hook up the equipment in my office. The lease is certainly airtight, legally, but the methods used to get me to sign it were unethical at best. Further, if I can’t use the equipment as promised (doesn’t sync with Freshbooks) I should not be required to continue paying for it, since I signed the contract with the promise that it WOULD work with my system.
In December, in addition to the 58.69 I have to see on my bank transactions each month that makes me curse, there was an additional charge from Northern Leasing of $25.
I called to find out what this was, and was told it was the annual fee for my account. Great.
This gave me renewed interest in cancelling the lease, even though I knew I would have to pay all the future payments upfront. I requested a payoff amount. It was about $2,400. Since I could either pay it in a lump sum or continue paying $58.69 per month for the next three years, it seemed like a bad decision to pay it all upfront, from a cash flow point of view. I could use that $2,400 to pay off credit card debt that is charging me interest. So I declined to take the pay off amount.
Instead, I will remain infuriated and apparently I will pay an annual fee of $25. For a CREDIT CARD TERMINAL I WILL NEVER USE.
Once I began digging into the lease paperwork more thoroughly, I realized that the amount shown as my monthly payment to lease the credit card terminal I will never use was less than what I was being charged.
I called Northern Leasing to inquire.
As it turns out, the monthly lease payment as shown is only valid if I file proof of insurance on the CREDIT CARD TERMINAL I WILL NEVER USE.
So I emailed my business insurance rep to request a copy of my policy, showing business personal property coverage at $25,000.
I sent this to Northern Leasing and they refused it, saying that Northern Leasing had to be specified on the policy as a Loss Payee for the amount remaining on the lease and the replacement value of the CREDIT CARD TERMINAL I WILL NEVER USE.
I acquired a new copy of my policy with Northern Leasing as a Loss Payee, and sent this in. The next month, my payment went down by a few dollars to $58.69 per month, as indicated in the lease.
