Customers Tells Us They Will Be Stopping Payment

  by Christopher Menkin

We are asked on the listserve communications for advice, particularly

regarding that they do not want to make leasing payments:

 “We're not   going to pay it.  Will see them in court.  I'm sure the leasing   companies new that it was a scam when the same box leased to different  companies were all different lease amounts.”

Here is a posting we recently made, our advice to NorVergence

users:

“I would strongly advise that you continue to make leasing payments.

“Norvergence would sign contracts and sell them off, just like many mortgage companies do.  That you bought something that does not work has nothing to do with the leasing contract you signed---although there is a class action suit to try and prove otherwise---but in the meantime, to not affect your credit or prejudice your position, it is advisable that you continue to make lease payments in a timely fashion.

“You signed the contract, you should honor the obligation and not become similar to what you accuse NorVergence of being.

“If you think the contract is "wrong," then you can join a class action suit or engage an attorney, but the best advice is not to affect your credit and make the payments on time----If your two year old car stops working, you don't stop making payments to the bank because it has little value, so do the same here.

“The leasing companies bought your credit and relied on you

that what you chose had value.  They did not choose the

equipment, you did.  You are responsible.  Live up to it.

“Keep the payments current as it has great value to you personally and to your business.”

Here is one response we received:

“...And this is why I think we need some legislation to regulate leasing.  When we start talking about the kind of numbers we have here, 7000 to 10,000 customers..?....quarter of a billion dollars?.. If a lease involves a service that is contingent on the performance of others, or service to be rendered, it seems a little bit different than just a lease for a tangible asset. Most customers understand that they need a good Telecommunication system, but don't understand all the intricacies. They partnered with a Company to provide a product, and on-going service. In the case of a small business it is a struggle just to keep the store open-- let alone being an expert on all of the peripheral services you depend on!  Explaining that the customer should have a -"Done their telecommunications Homework"- before they sign a lease for that service doesn't wash with me. You should be able to trust someone...you would think. I would think that with the numbers we had here, maybe the leasing companies should have done some homework.  Why should the leasing business be bullet proof and risk free?

Leasing companies can afford to hire the talent to do feasibility and risk analysis studies,--The bakery cannot. -- If my leased vehicle breaks down..you and I both know chances are pretty good I'll get it fixed.  Could you say the same about these deals?... you have to draw the line somewhere. The customers and employees are all taking a bath on this one...I'd like to be the first to move over and welcome the leasing companies to the bathtub!....

  and our response back:

Leasing does have such an instrument and it is called a "maintenance lease."

It is priced differently than a "standard" lease and includes what you mention. It is also not uncommon in automobile or computer or copier leases, where they even put in mileage or "per copy" as part of the agreement.

These leases have a different rate and structure, much higher than a "standard" lease.

In all the many, many leasing contracts I have seen the leasing companies go out of their way to state they did not choose the equipment, have no responsibility for warranty, service, or maintenance, as that is the responsibility of the lessee.

The lease is priced for this philosophy.  Very similar to an insurance policy, the higher the risk, the higher the premium to cover the risks

( return on investment, if you will.)

There are furniture workstation leases that wind up costing more to take apart and move than they are worth, or laptop computers after three years or personal computers after three years cost more to dispose than the value of the parts, and the list can go, as to collateral value.

However, I will agree with you that the leasing companies who got involved with NorVergence should have done their home work.  For over two years Leasing News readers were telling us the problems they were having and to be weary, but not everyone heard, let alone

listened.  The employees who also knew what was going on, where are they now, but crying the blues because they did not get paid.  It wasn't their responsibility the company went under, they claim.

But in the end, the lessee took responsibility for choosing the equipment.

    If a woman burns her thighs on the hot coffee she was holding in her lap while driving, she blames the restaurant.

    If your teen-age son kills himself, you blame the rock 'n' roll musician he liked.

    If your daughter gets pregnant by the football captain you blame the school for poor sex education.

    If your neighbor crashes into a tree while driving home drunk, you blame the bartender.

    If your grandchildren are brats without manners, you blame television.

    If you smoke three packs a day for 40 years and die of lung cancer your family blames the tobacco company.

    If you blame your wife for not wanting romance, but you have done nothing to promote it, and call her "cold."

"God bless America, land of the free, home of the blame."

What's going on here? No one is willing to step up to the plate? It's always someone else? It's not me? It's the Leasing Company.