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Leasecomm will cancel $24 million in judgments deceptively obtained against consumers 3

COUNT IV

42. In numerous instances, in connection with the financing of business ventures, Leasecomm's practices of
including in its finance contracts provisions authorizing it to file lawsuits in venues other than the customer's
place of residence or the location where the customer executed the contract, and of filing lawsuits under finance
contracts in venues other than the customer's place of residence or the location where the customer executed
the contract, are likely to cause substantial injury that cannot be reasonably avoided, and are not outweighed by
countervailing benefits to consumers or competition.

43. Therefore, Leasecomm's practices, as alleged in paragraph 42 above, are unfair and violate Section 5(a) of
the FTC Act, 15 U.S.C. § 45(a).

COUNT V

44. In the course of providing financing to consumers, defendants have regularly conditioned the extension of
credit on the consumers signing a contract that includes compulsory electronic funds transfers from accounts
established primarily for personal, family, or household purposes, in violation of the EFTA, 15 U.S.C. § 1693k,
and Reg. E, 12 C.F.R. § 205.10 (e).

45. Pursuant to the EFTA, 15 U.S.C. § 1693o(c), every violation of the EFTA and Reg. E constitutes a violation of
the FTC Act.

46. By engaging in violations of the EFTA and Reg. E as alleged in paragraph 44 above, defendants have
engaged in violations of the FTC Act.

CONSUMER INJURY

47. Consumers throughout the United States have suffered substantial monetary loss as a result of defendants'
unlawful acts or practices. In addition, defendants have been unjustly enriched as a result of their unlawful
practices. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers and to
harm the public interest.

THIS COURT'S POWER TO GRANT RELIEF

48. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers the Court to grant injunctive and other ancillary
relief, including consumer redress, reformation or rescission of contracts, and cancellation of purported debts, to
prevent and remedy violations of any provision of law enforced by the Commission.

49. The Court, in the exercise of its equitable jurisdiction, may award other ancillary relief to remedy injury
caused by defendants' violations.

PRAYER FOR RELIEF

Plaintiff requests that the Court, as authorized by Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and
57b, and pursuant to its own equitable powers:

1. Enter judgment against defendants and in favor of the Commission for each violation alleged in this
complaint.

2. Permanently enjoin and restrain defendants from violating the FTC Act, the EFTA, and Reg. E.

3. Award such relief as the Court finds necessary to redress injury to consumers resulting from the
defendants' violations of the FTC Act and the EFTA, including but not limited to, reformation or rescission
of contracts, and the cancellation of purported debts.

4. Award plaintiff the costs of bringing this action, as well as such other and additional equitable relief as
the Court may determine to be just and proper.

Respectfully submitted,

Dated: May 22, 2003

WILLIAM E. KOVACIC
General Counsel

RANDALL H. BROOK
ROBERT J. SCHROEDER
Attorneys for the
Federal Trade Commission
915 2nd Avenue, Ste. 2896
Seattle, WA 98174
206.220.4487 (Brook)
206.220.4477 (Schroeder)
206.220.6366 (fax)

FINAL SETTLEMENT
You can read the final settlementt at http://www.ftc.gov/os/2003/05/leasecommstip.htm. Or here:
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

FEDERAL TRADE COMMISSION,
Plaintiff,

v.

LEASECOMM CORPORATION and
MICROFINANCIAL INCORPORATED, Defendants

CIVIL ACTION NO.

STIPULATED FINAL JUDGMENT AND ORDER

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), filed its complaint for a permanent injunction
and other relief pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.
§§ 53(b) and 57b, and the Electronic Funds Transfer Act ("EFTA"), 15 U.S.C. § 1693. The Commission and
defendants, Leasecomm Corporation and MicroFinancial Incorporated, have conferred through counsel and
agreed to settlement of this action without adjudication of any issue of law or fact herein. This Order resolves all
matters arising from the allegations in the complaint. The Commission and defendants consent to entry of this
Stipulated Final Judgment and Order ("Order").

THEREFORE, the Commission and defendants, having requested the Court to enter this Order, it is ORDERED,
ADJUDGED, AND DECREED as follows:

FINDINGS

1. This Court has jurisdiction over the subject matter of this case and jurisdiction over the defendants. Venue in
this district is proper.

2. The complaint states a claim upon which relief may be granted against defendants under Sections 5(a),
13(b), and 19 of the FTC Act, 15 U.S.C. §§ 45(a), 53(b), and 57b, and under the EFTA, 15 U.S.C. § 1693.

3. The activities of defendants described in the complaint are in or affecting commerce, as defined in Section 4
of the FTC Act, 15 U.S.C. § 44.

4. Entry of this Order is in the public interest.

5. Entry of this Order shall not constitute an admission or finding of liability by defendants or that any defendant
has engaged in violations of the FTC Act or any other law.

6. The defendants have waived all rights to seek judicial review or otherwise challenge or contest the validity of
this Order.

7. Each party shall bear its own costs and attorneys' fees.

8. Pursuant to Federal Rule of Civil Procedure 65(d), the provisions of this Order are binding upon defendants,
and their officers, agents, servants, employees, and all other persons or entities in active concert or
participation with them, who receive actual notice of this Order by personal service or otherwise.

ORDER

Definitions

For purposes of this Order, the following definitions shall apply:

1. "Business venture" includes any written or oral business arrangement, however denominated, that:

a. is covered by the FTC's Franchise and Business Opportunity Rule; or

b. is a purported profit making venture (e.g., multilevel marketing programs, pyramid schemes, buyers'
clubs, coupon clipping programs, investment opportunities, etc.), regardless of how participation in the
venture is characterized (e.g., as investors, members, donors, etc.), seminar, or promotion that seeks
to induce customers to make money through business or investment, or a similar intangible item.

2. "Clearly and prominently" means:

a. in a printed document or package of documents, the disclosures will be in a type size and location
sufficiently noticeable for an ordinary customer to read and comprehend, in print that contrasts with the
background against which it appears; and.

b. in a verbal sales presentation, including promotional seminars, the disclosures will be provided in
verbal form during any part of the sales presentation that discusses the financing.

3. "Customer" is any natural person who is individually liable to pay one or more defendants for financing,
either directly or indirectly, e.g., as a cosignor, guarantor, proprietor, or a signatory general partner.

4. "Defendants" means Leasecomm Corporation and MicroFinancial Incorporated, and their divisions,
subsidiaries, successors, and assigns.

5. "Financing" or "financing contract" means any financing arrangement, whether styled as a contract, lease, or
otherwise. For purposes of this Order, the term "financing" includes any debt collection activities related to the
financing.

6. "Predominant purpose" means the purpose of the financing as represented to the customer by the dealer or
vendor or as evidenced by distribution of proceeds.

7. "Dealer" or "Vendor " means any person or entity who, directly or indirectly, arranges for a customer to apply
for defendants' financing or provides defendants' financing documents to customers.

8. "SBI product lines" means virtual terminals and various other software, software licenses, and combinations
of products that are financed, and referred to internally by Leasecomm, as: INTERNET CONSULTING PKG,
COMBOV 3, CR COMBO, CR COMBOE, CR COMBOS, CR COMBOW, CR CRD 3 30, CR CRD 30, CR VTERM, CR
VTERM 30, CR VTERM3 30, INTERNET TBX, SBI COMBOV, SBI CRD TERM, SBI VTERM, SOFTWARE, WEB SITE.

9. "SBI judgments" means Leasecomm's uncollected judgments for the SBI product lines.

10. "SBI suits" means all pre-judgment, civil collection actions currently pending in court in which Leasecomm or
an assignee of Leasecomm is the plaintiff and the product purportedly leased is in an SBI product line.

11. "Virtual terminal" means a point of sale (POS) authorization system which includes any intangible products,
rights to access or use services, software, and licenses which enable customers to process credit card
transactions or account debits on-line or through the Internet over a computer.

PROHIBITIONS ON MISREPRESENTATIONS AND REQUIRED DISCLOSURES

I. IT IS ORDERED that defendants and their agents, employees, officers, attorneys, and all other persons or
entities directly or indirectly under their control or under common control with them, and those persons in active
concert or participation with defendants who receive actual notice of this Order by personal service or otherwise,
in connection with any financing offered or provided to customers, are permanently restrained and enjoined from
making any material misrepresentations, directly or indirectly, including:

A. Misrepresenting the nature, terms, or predominant purpose of the financing.

B. Misrepresenting that the customers have waived any defenses, or are precluded from raising defenses
or counterclaims.

II. IT IS FURTHER ORDERED that defendants, and their agents, employees, officers, attorneys, and all other
persons or entities directly or indirectly under their control or under common control with them, shall clearly and
prominently disclose, in writing and during oral sales presentations by their dealers and vendors, that the
financing contract is with Leasecomm and not with a dealer or vendor.

PROHIBITED CONTRACT PROVISIONS

III. IT IS FURTHER ORDERED that defendants, in connection with financing provided to customers, are
permanently restrained and enjoined from:

A. Including in any financing contract any provision that allows defendants to bring a collection suit in a
forum other than the county where the customer resides at the commencement of the action, or in the
county where the customer signed the contract sued upon.

B. Including in any financing contract any provision that (1) states that defendants have the right to
enforce the contract free from any defenses, offsets, or counterclaims, (2) states that the customer
waives any defense or counterclaim, or (3) states that the customer has no defenses, offsets, or
counterclaims, except to the extent that the provision is authorized by law.

C. Including in any financing contract any provision that purports to make the customer's obligation to
pay binding solely upon the customer's acceptance of a credit card swiping machine or other item of
tangible equipment, where the predominant purpose of the financing is a business venture or other
intangible item.

D. Conditioning the extension of credit to a customer on the customer's repayment by means of
preauthorized electronic fund transfers from an account established primarily for personal, family, or
household purposes, to the extent prohibited by the EFTA, 15 U.S.C. § 1693k, and Reg. E, 12 C.F.R.
§ 205.10 (e).

PROHIBITED DISTANT FORUM PRACTICES

IV. IT IS FURTHER ORDERED that, in connection with financing provided to customers:

A. Defendants are permanently restrained and enjoined from instituting collection suits against
customers in a forum other than the county where the customer resides at the commencement of the
action, or in the county where the customer signed the contract sued upon; except that this provision
shall not apply in any way to suits filed against defendants. This provision shall not preempt any rule of
law that further limits choice of forum or that requires, in actions involving real property or fixtures
attached to real property, that suit be instituted in a particular county.

B. Where defendants learn subsequent to institution of a suit that paragraph IV.A above has not been
complied with as to suits filed after the entry of the Order, they shall immediately seek to dismiss the
suit, with or without prejudice, and move to vacate any judgment entered thereunder. In lieu of
dismissal, defendants may effect a change of forum to a county permitted by the preceding paragraph,
provided that defendants give the customer notice of this action and opportunity to defend equivalent to
that which the customer would receive if a new suit were being instituted. If defendants effect a
dismissal, they may file a new suit in a forum permitted by Paragraph IV.A above. In any case where
defendants transfer a suit, they shall provide the customer with a clear, written explanation of the action
taken and, if the suit is transferred or refiled, of the customer's right to appear, answer, and defend in
the new forum.

C. Where defendants effect dismissal of a suit or vacation of a judgment pursuant to paragraph IV.B
above, they shall give effective notice of the dismissal or vacation to the affected customer and to each
consumer reporting agency, as that term is defined in the Fair Credit Reporting Act, 15 U.S.C. § 603, or
business credit reporting agency, that defendants have informed of the suit or have reason to know
regularly records defendants suits or judgments in its files. Effective notice is notice given in the manner
ordinarily provided by defendants reasonably sufficient to remove or correct any negative effect on the
customer's credit rating that may exist due to the original reporting of the judgment or suit. Additionally,
defendants shall furnish the notice to any other person or organization upon request of the customer.

REDRESS

V. IT IS FURTHER ORDERED that:

A. In connection with collections on financing to customers, defendants shall cease collecting on any
outstanding court judgments where the financing involved virtual terminals or the predominant purpose
of the financing was for business ventures. Defendants shall be deemed in compliance with the preceding
sentence if they promptly cease collections on any outstanding SBI judgments and thereafter, for a
period of one year after entry of this Order, cease collections on any other outstanding judgment where
the customer demonstrates that the predominant purpose of the financing was for a business venture.
This cessation of collections shall include, but is not limited to, directing all third parties engaged in debt
collection (e.g., debt collectors and debt collection attorneys) to cease immediately all collection
activities; furnishing credit information to the three credit reporting agencies to whom the defendants
report to show the applicable account no longer has an outstanding balance; returning all monies
received from customers after the effective date of this Order; filing in the court where the initial
judgment was entered a Satisfaction of Judgment; and sending a copy of the Satisfaction of Judgment to
each affected customer or its attorney of record along with the form shown in Attachment A to this Order.
Defendants shall provide the FTC with a computer readable list of the affected customers, including
names, addresses, account numbers, product(s) financed, amount outstanding at the time of entry of
this Order, and, whenever available in Leasecomm's records, the location of the court in which the
judgment was entered and the date of the judgment.

B. Defendants shall not take any action to enforce any contract provision that would have violated
paragraph III.B if it had been used after entry of this Order.

C. Within 30 days after entry of this Order, defendants shall move the appropriate court to:
1. Dismiss, with or without prejudice, any SBI suit pending in a forum that would have violated
paragraph IV.A if the suit were filed after entry of this Order. In lieu of dismissal, defendants may
effect a change of forum to a forum permitted by this Order, provided that defendants give the
customer notice of this action and opportunity to defend equivalent to that which the customer
would receive if a new suit were being instituted.

2. Stay or continue any pre-judgment, non-SBI product line collection suits against customers
pending in a forum that would have violated paragraph IV.A if the suit were filed after entry of this
Order. Defendants shall promptly notify the customer in writing that the customer has the
opportunity to have the litigation transferred to, or dismissed without prejudice and refiled in, a
forum permitted by this Order. Defendants shall maintain the stay or continuance in effect for 50
days so that the customer has at least 45 days to reply, as set forth in the relevant portions of
Attachment B to this Order. If the customer elects to have the suit changed to a local forum,
defendants shall follow the procedure described in paragraph V.C.1 above.

D. In all cases under paragraphs V.C, defendants shall provide the customer with a clear, written
explanation of the action taken and of the customer's right to the change of forum and to appear,
answer, and defend in the new forum. If the defendants are entitled to claim any collection costs or
attorney fees, they may not charge the customer for any costs or fees associated with the initial filing or
the change of forum. If local rules require a defendant's agreement to dismissal or transfer of the suit,
then defendants shall not be obligated to dismiss or transfer the suit if, after providing the customer or
their counsel with a clear, written explanation of the customer's right to have the suit dismissed or
transferred to the new forum, the customer does not execute and return the documents required for
transfer or dismissal without prejudice. The notice shall be in the form shown in Attachment B to this
Order, with appropriate paragraphs included. A violation of paragraphs V.C-D shall render any judgment
entered in the prohibited forum as a result thereof null and void and unenforceable by the defendants or
their assigns.

E. Where defendants dismiss suits pursuant to paragraph V.C above, they shall give effective notice of
the dismissal to the affected customer and to each consumer reporting agency, as that term is defined in
the Fair Credit Reporting Act (15 U.S.C. § 603), or business credit reporting agency, that defendants have
informed of the judgment or suit or have reason to know regularly records defendants suits or judgments
in its files. Effective notice is notice given in the manner ordinarily provided by defendants to credit
reporting agencies reasonably sufficient to remove or correct any negative effect on the customer's credit
rating that may exist due to the original recording of the judgment or suit. Additionally, defendants shall
furnish the notice to any other person or organization upon request of the customer.

F. Within 30 days after entry of this Order, defendants shall provide a Customer Notice to all
pre-judgment customers (1) with financing in any SBI product line, or (2) who receive, or have received
within the six months prior to entry of this Order, any collection calls or letters from defendants or any
collection agent of defendants. The notice shall be in the form shown in Attachment B to this Order, with
appropriate paragraphs included as applicable to the particular customer. The Customer Notice above
shall be prepared by defendants and inserted into pre-paid, first class mail envelopes with a return
address designated and format approved by the FTC. Defendants shall deliver the envelopes to the FTC
or its designee, boxed and sorted appropriately for inspection and mailing. Defendants shall provide the
FTC with a computer readable list of customers to whom the notices are being sent, including names,
addresses, account numbers, product(s) financed, and indicators of the notice form and paragraph(s)
used.

G. Within 30 days after entry of this Order, where any lawsuit is pending in a forum not otherwise
prohibited by this Order but where defendants have pled or argued in any manner based on contract
language that would be inconsistent with III.B above, defendants shall cease relying upon that
argument, including filing at the first procedural opportunity, an appropriate pleading with the court that
effectively withdraws the pleading or argument.

H. Where a financing contract contains a provision for electronic funds transfers and the customer notifies
defendants that the customer's account referenced in the contract was established primarily for personal,
family, or household purposes, defendants shall allow the customer to choose an alternative means of
payment upon request of the customer. Defendants may not charge the customer for using the
alternative means of payment unless the charge is expressly authorized by the financing contract and is
permitted by the EFTA, 15 U.S.C. § 1693, and Reg. E, 12 C.F.R. § 205.