N.H. customers get debt relief in telecom settlement

More than 1,000 small businesses across the country – including some in New Hampshire — have been released from some of their obligations to three leasing companies associated with a now-bankrupt telecomm provider.

The settlement — potentially as much as $30 million, according to New Hampshire officials — was filed May 26 in Suffolk County Superior Court in Massachusetts as a result of a multi-state action that included 21 states, including New Hampshire. The effort was led by Massachusetts Attorney General Tom Reilly.

As reported in the Aug. 20-Sept. 2, 2004 New Hampshire Business Review, Newark, N.J.-based NorVergence promised its small-business customers in New Hampshire and other states substantial savings on their telecommunications bills and had them sign long-term contracts for equipment. NorVergence then sold those contracts to a number of different leasing companies before it was forced into bankruptcy in July 2004.

NorVergence stopped providing services immediately prior to bankruptcy, but the leasing firms continued to demand payments — as high as thousands of dollars a month — for useless equipment that retailed for less than $1,000.

Three leasing companies — CIT Group/Equipment Financing Inc. of Livingston, N.J., Lyon Financial Services, known as U.S. Bancorp Business Equipment Finance Group, of Marshall, Minn., and Wells Fargo Financial Leasing Inc. of Des Moines, Iowa — were named in the settlement and will either provide refunds or clear debts owed by former NorVergence customers that held leases with them.

New Hampshire Senior Assistant Attorney General Richard Head said that the state signed off on the Wells Fargo and the USB portions of the settlement. He said there were no New Hampshire customers of CIT Group.

“The settlement does still require consumers to pay a portion of their lease,” said Head. “USB requires its clients to be current on their leases through July 15, 2004, and with Wells Fargo, through July 31, 2004. After that, the leasing companies require 15 to 20 percent of the remaining contract. They feel their contracts are still valid, but the agreement helps both the leasing companies and their customers avoid costly litigation. There is nothing in the settlement that prevents an individual consumer from going to court over the remainder of their contract.”

Head said five New Hampshire customers are affected by the settlement — three Wells Fargo customers owing a total of $67,000, and two USB customers owing a total of $100,000.

Businesses with questions about NorVergence leases should call the attorney general’s consumer protection bureau at 271-3641.

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