Florida AG Charlie Crist Initiates Settlement with Leasing Company

Collections will cease, consumers to receive refunds

TALLAHASSEE - Attorney General Charlie Crist today announced a settlement agreement with Patriot Leasing Company, Inc., one of 12 leasing companies recently under investigation for violations of Florida's Unfair and Deceptive Trade Practices Act. Under the settlement consumers will receive refunds, in some cases for more than $1,000. The settlement concludes litigation regarding the collection practices of Patriot and involves contracts for services from the bankrupt NorVergence Corporation. Litigation continues with the remaining 11 defendants in the case.

The Attorney General's Office filed a complaint in October 2004 against 12 leasing companies, including Patriot, after receiving more than 253 complaints from Floridians asserting that Patriot and the other leasing companies were demanding unfair payments for their contracts with NorVergence.

"Hundreds of Floridians have been outraged by the conduct of NorVergence and some leasing companies," said Crist. "We will not stand by while small businesses are sold a bill of worthless goods and then are harassed for not paying for them. We are pleased that this company has taken a positive step to do the right thing. Under this agreement, Florida citizens will not be required to make further payments and instead will receive refunds."

The settlement agreement requires Patriot to cease collection efforts on contracts with Florida customers and to provide restitution to those customers for payments already made under the contracts. The company has also agreed to reimburse the Attorney General's Office for costs and fees in connection with the investigation.

Leasing companies purchased contracts from NorVergence beginning in 2003, after NorVergence had entered into agreements with approximately 700 small Florida businesses to provide local telephone, mobile phone and high-speed Internet services at reduced rates. The small business owners agreed to sign contracts with NorVergence with an understanding of the following terms:

- They were obtaining telephone services directly from NorVergence.
- NorVergence would provide the customers with unlimited long distance, cell phone and high-speed Internet at greatly reduced rates.
- In order to use the NorVergence services, customers would have to rent a "Matrix" box.

NorVergence terminated service when it went into bankruptcy, and thus did not honor the business terms. The company either did not install the Matrix box for customers or the box did not function properly.

Additionally, it was discovered that the Matrix was nothing more than a commercial router that sells for $500 to $1,200, creating an unconscionably large disparity between the value of the box and the $1,000-per-month lease payments due under the rental agreement.

In further violation of the agreement, the leasing companies then began demanding payments for services that were never provided. When customers missed their monthly bills, the leasing companies accelerated payments and demanded payment in full, in sums ranging from $10,000 to more than $90,000.

The Attorney General continues to pursue the remaining leasing companies named in the October lawsuit and is seeking an injunction to bar further collection efforts by these companies against Florida customers. A hearing on the injunction has been set for the trial docket commencing at the end of January in Leon County.