November 1, 2014 • By Dennis Beaver

If your business uses a credit card reader — also called a credit card swiping machine — today’s story will prevent you from becoming one more victim in an on-going nationwide rip-off of small businesses across the United States.

A multi-million dollar lawsuit settled by the New York Attorney General and ongoing class action suit in California have established:

“A nationwide scheme of mail fraud, wire fraud, bank fraud and other criminal acts against mom and pop stores and other small businesses in connection with the leasing of credit card processing equipment and sale of electronic payment processing services.”

Google: Northern Leasing/ Lease Finance Group

You have to really try to get an F rating from the Better Business Bureau, but that’s what Northern Leasing, Lease Finance Group — and many other closely connected shell companies — have earned from the thousands of complaints filed against them, just as Hanford hair stylist Baljit would discover on Oct. 23, 2013.

On that day, she met a salesman who promised her tremendous savings on credit card transactions if she would agree to sign a non-cancellable four-year lease with New York based Lease Finance Group. Bajit was unaware that she could have purchased these machines for under $500, and by signing, was now on the hook for thousands of dollars. “It never occurred to me that I should Google the company,” she told us.

“Instead of saving money, in just a few days they made several unauthorized withdrawals from my bank account. I realized this was a scam, and returned the machines within two weeks,” she explained showing us proof of receipt.

But this did not matter to Lease Finance Group, or its big brother, Northern Leasing, as between Oct. 28, 2013, and Jan. 2, 2014, $1219 was taken out of her bank account, then letters from collection agencies began to arrive, and that was just the beginning of Baljit’s nightmare – which isn’t over yet.

Pay up or else — legal extortion

In August, a large envelop was delivered to her beauty parlor containing drafts of two lawsuits — one for each machine — demanding over $10,000 for breach of contract, ready to be filed in New York.

We spoke with an angry, frustrated senior clerk at the New York court who explained, “In my opinion, this is extortion, contract-based, legal extortion. Unless you pay, that suit will be filed, and we have over 9500 lawsuits — against small business owners all over the country — stacked up, waiting for trial. However, what usually happens is that a default judgment is taken against the poor business owner who just can’t afford to defend themselves in New York.”

If you’re thinking: “Doesn’t the law require suing a person where they live? Also, they took all that money from her account and accepted return of the machines, so isn’t that the same thing as admitting the contract is over?”

Those are good arguments and often correct, but the creeps who run this operation have some pretty smart lawyers, and we’ll come back to these issues in just a moment.

If you had to guess, what do you think their attorneys are like? Are they arrogant jerks who wear an Al Capone T-shirt in the office, unwilling to speak with a journalist who just happens to be a lawyer, or nice guys, proud of their client and enjoy being the legal muscle of what has been referred to as a criminal enterprise?

Many lawyers would rather not be associated with a client who has paid millions of dollars in penalties for ripping off its customers, but not the chap we spoke with. He is intelligent, friendly and in a perverted way proud of the fact that his client sticks it to unsophisticated mom and pop small business owners who sign this outrageous “non-cancellable four-year lease.”

What makes this guy so morally disgusting is his own personal, minority background, very much in the news today, of a people who have experienced horrible mistreatment and great unfairness. And yet, he knowingly uses his skills as a lawyer to hurt others.

Speaking with him on the phone was a conversation with the devil — but a very friendly, professional devil indeed. It was weird with a capital W.

Business owners have less legal protection

“It is important for mom and pop — small business owners — to understand that when you sign a commercial contract, in most instances it is enforceable and will be enforced against you,” observes Bryan Hull, Professor of Law at Loyola Law School, Los Angeles.

“Even students in my Commercial Law course are often surprised to discover that the ‘Costco Mentality’ of bringing it back for any reason without obligation–is not the law,” Hull notes.

Next Time: Professor Hull has 12 rules which, if followed, will keep small business owners out of trouble.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.