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Northern Leasing Systems Coercive Practices and Fraud Class Action

Customer Extending Credit Card to Payment Processing Device

Small business owners generally used payment processing companies to handle their customers’ credit or debit card payments. The complaint for this class action alleges that one such company, Northern Leasing Systems, Inc., “swindles” small business owners by hiding their services’ true costs and locking them in to contracts that they cannot cancel. The complaint brings suit under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).

The class for this action is all Florida consumers who entered into a lease with Northern Leasing Systems for credit card processing equipment and services between May 10, 2015 and the present.

Plaintiff Stephen L. Chorba owns a small business called “Shirts N Things” in Florida. A sales agent for Northern visited him and told him that he could save money by leasing Northern’s equipment for payment processing. 

Chorba agreed to do business with him and signed an electronic pad. Later, the sales agent gave him a Non-Cancellable Equipment Finance Lease Agreement that Chorba did not sign. That document does not contain a Notice of Consumer’s Right of Cancellation, as required by Florida law. 

The lease says that Chorba would lease a certain model of pinpad for $99 per month over forty-eight months, for a total of $4,752. However, the complaint says that the actual cost of the equipment is roughly $400. In other words, Chorba was given a contract obliging him to pay about twelve times what the equipment is worth. 

Two days after the sales agent first approached him, Chorba decided to cancel the contract. Florida law permits consumers to cancel a contract within three days. Chorba never actually used any of Nothern’s equipment or services. However, nearly two years later, Chorba is being billed for some $6,476.48 and sent threatening letters insisting that he pay up.

The complaint says this is how Northern does business: “When the consumer attempts to cancel the lease, [Northern] sends threatening collection letters and makes harassing phone calls to scare the consumer into paying more than what they were promised.”

It doesn’t end there. “If the consumer refuses to pay [Northern] files suit in a foreign jurisdiction without personally serving the consumer. … [Northern] then purports to serve this suit not by personal service, but by mail (if at all), and then steamrolls improperly obtained defaults through the courts to enter judgements against, among others, Florida consumers in New York.”

Does it work? The complaint says Northern has been sued by the New York Attorney General for these practices. “According to the NYAG, over 95% of consumers sued by [Northern] and its related entities reside outside of New York and since 2010, [Northern] and its affiliates have filed over 30,000 actions in New York County Civil Court and obtained over 19,000 default judgments…”

Northern apparently has a D rating with the Better Business Bureau.

The complaint alleges violations of Florida law, fraud, and negligent misrepresentation, among other things.

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