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Attorney General Schneiderman Sues Northern Leasing Systems, Inc. For Abusive and Deceptive Practices

On Tuesday, April 13, 2016, Attorney General Eric T Schneiderman announced that a lawsuit had been filed against Northern Leasing Systems Inc., for their “fraudulent and deceptive practices that trap small business owners across the country.” It has been alleged that Northern Leasing trapped small business owners into perpetual lease agreements for over-priced credit card processing equipment. The lawsuit also alleged that the company abused judicial process by suing in the Civil Court of the City of New York, regardless of the timeliness of the claim, legitimate efforts to terminate leases, and whether the debts were fraudulent. The petitioners in this proceeding include Attorney General Schneiderman and Deputy Chief Administrative Judge Fern A. Fisher.

Northern Leasing Systems Inc. is a New York company. Its affiliates, who are also included in the lawsuit, include Lease Financial Group LLC, MBF Leasing LLC, Pushpin Holdings LLC. Additionally, principal Jay Cohen and law firm Joseph I. Sussman, P.C. are included in the lawsuit. Northern Leasing is an equipment finance company specializing in the origination and servicing of micro-ticket leasing. They have originated over 500,000 equipment leases since it opened in 1991. Currently, the Attorney General’s office has secured a temporary restraining order stopping Northern Leasing from “selling, assigning, or transferring any equipment finance lease for less than fair market value.” The company must provide the Attorney General’s Office with a list of all assets within five days of service.

The recovery sought by the lawsuit is to vacate default judgments obtained by Northern Leasing against consumers. Many of these consumers were never notified about the pending litigation and subsequent judgments until they checked their credit reports. The lawsuit also seeks addition relief including but not limited to: (1) a permanent injunction prohibiting Northern Leasing and all affiliates from continuing their deceptive business practices; (2) ordering Northern Leasing to pay restitution to consumers; and (3) dissolving Northern Leasing and directing it to notify all three national credit reporting agencies that the default judgments have been vacated and should be removed from consumers’ credit reports.

The investigation of Northern Leasing revealed that the company commonly targeted small businesses across the United States. They induced many individuals to sign lease agreements without properly understanding the leases terms. Additionally, they falsely represented many facts about the lease agreement including that it would save the individual money or that the individual could cancel the lease at any time. Many consumers reported that terms were added to their leases without their knowledge and in several cases, the signature on their leases were forged. Over the course of the lease, consumers would pay thousands of dollars for equipment valued at only a few hundred dollars. Additionally, Northern Leasing would not cancel the leases regardless of the functionality of the equipment or even if the signature on the lease was forged.

Upon nonpayment of the lease, the consumers were barraged with harassing phone calls and threatening letters from Northern Leasing’s employees and the law firm of Joseph I. Sussman, P.C. The law firm commenced several collection action in New York Civil Court regardless of its knowledge that many of the debts were not collectable. Also, demanding that defendants in these cases travel to New York was prohibitive in most of these cases because of outlandish travel costs and attorney’s fees. It is alleged that Northern Leasing and Joseph I Sussman, P.C. filed more than 30,000 collection actions between 2010 and 2015. More than 19,000 default judgments have been issued since 2010. According to Attorney General Schneiderman, “[N]orthern Leasing not only deceived consumers, but used the New York court system to perpetrate their harassing, fraudulent, and deceptive debt collection practices. We will not allow companies to hold small businesses for ransom by using lies and forgery.”

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