NY attorney general files suit against POS leasing firm

New York Attorney General Eric Schneiderman filed suit April 23, 2012 accusing POS leasing firm Northern Leasing Systems Inc. and its affiliates of stealing between $3.6 million and $10 million from former customers.

"These companies engaged in a series of deceptions to squeeze unauthorized fees out of their former customers up to a decade after their contracts expired," Schneiderman said. "We will seek both restitution for defrauded customers and substantial penalties from the companies to ensure justice and accountability prevail."

The allegations

Schneiderman alleges Northern Leasing created a shell company, SKS Associates LLC, to make unauthorized debits from more than 100,000 of its former POS leasing customers. The attorney general additionally alleges SKS successfully pulled more than $10 million out of former client bank accounts, keeping at least $3.5 million. Some former customer accounts were debited as much as 11 years after their leases expired. The attorney general said SKS claims the fees collected were to pay for uncollected property taxes and administrative fees.

The attorney general's office said, "The company could not explain why it failed to collect the amounts previously, nor could it show that the alleged amounts were actually owed. In fact, 77 percent of the amounts SKS sought to collect were not taxes at all but 'administrative fees.'"

Schneiderman believes SKS was formed to "deliberately mislead customers in an attempt to avoid any harm to Northern Leasing's business reputation." As a result, thousands of former Northern Leasing and affiliates' customers were surprised to find their bank accounts debited by a company they had never heard of or done business with.

The list of allegations filed against Northern Leasing includes:

• Allowing SKS to begin debiting bank accounts before it was legally registered to do business
• Sending out notice letters on the same day as, or only one day before, accounts were debited
• Stopping customer notification of the charges and debiting accounts with no notice when complaints became overwhelming
• Debiting accounts of former customers who opted to purchase the POS system and had releases from any further claims
• Lying to former customers by telling them the unpaid taxes and fees were discovered when the account was audited when there was no audit conducted
• Threatening customers with referrals to collection agencies and credit bureaus if the debits were challenged when there was no intention to carry out the threat

Northern Leasing did not respond to phone or email requests for comment.

Recommendations to court

The attorney general asked the court to direct Northern Leasing to stop its allegedly illegal practices, give an accounting of every former customer from whom Northern Leasing debited money, give full restitution to the injured parties, disperse all profits acquired from the alleged illegal activity, pay civil penalties of up to $5,000 for each incident and grant costs of $2,000 for each respondent.

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