icroFinancial, Inc. subsidiary Leasecomm Corp. has agreed to renounce $24 million in court judgments against its customers and amend its leasing contracts and debt-collection practices as part of a settlement with the Federal Trade Commission (FTC) and eight states.

Through Leasecomm, Micro- Financial specializes in microticket financing - leasing commercial products and services priced between $500 and $10,000 where the monthly payment range is between $10 and $200.

According to the FTC, Leasecomm was financing "get-rich-quick schemes" of vendors that target consumers for entrepreneurial-style business opportunities such as Internet Web malls, multilevel marketing programs, medical billing software and coupon-clipping programs that are typically featured on infomercials and at conferences. Leasecomm allegedly pursued this business through the use of "shady agents, deceptive contracts and false claims."

In its charges, the FTC complained that Leasecomm either knew or should have known that its vendors used deceptive practices to sell their business ventures and that Leasecomm's contracts (called "leases") for these types of businesses not only had devious provisions to ensure that customers paid but also to absolve Leasecomm from any legal responsibility for fraudulent schemes.

If consumers didn't pay, then Leasecomm pursued aggressive collection policies and/or sued them in Massachusetts courts rather than in the state where the consumer was located. Most people could not afford the legal fees and traveling expenses required to defend themselves. The FTC's complaint alleges that Leasecomm pursued its customers "even when the customers have been defrauded and received nothing of value."

The FTC also alleges that Leasecomm has sued more than 27,000 consumers in the last three years in Massachusetts courts and as of January 2003 had 2,200 suits pending.

"Companies that try to hide behind the fine print in contracts and lie to consumers about what they're signing, whether directly or through agents, simply do not pass muster," Howard Beales, Director the FTC's Bureau of Consumer Protection, said in a statement.

In addition to the FTC, the attorneys general of Massachusetts, Florida, Illinois, Texas, North Dakota, North Carolina and Kansas and the District Attorney of Ventura County, California participated in the settlement negotiations.

As part of the settlement, Leasecomm agreed to pay a $1 million fine to cover the costs of the investigation and to revise its leasing policies and contracts and address all provisions that contain misrepresentations about the terms of the contract.

Leasecomm also must bar from its contracts any illegal items such as waivers of defense and the requirement for an electronic funds transfer.

If Leasecomm sues someone, it must do so "where the customer resides or signed the contract." Leasecomm also is required to give consumers who are currently being sued by the company the option of having the suit conducted locally.

Leasecomm denies any unlawful activity and agreed to a settlement "because it was the only cost-effective solution that enables the company to move forward and focus on business," MicroFinancial President and CEO Richard Latour said in a statement.