November 23, 2004
Yet another state is going after NorVergence, the New Jersey-based telephone company that stands accused of defrauding hundreds of small businesses across the country. Massachusetts Attorney General Tom Reilly is seeking the return of thousands of dollars to Massachusetts small business owners who paid a for services that were never rendered.
In his suit, Reilly alleges that NorVergence misled more than 200 Massachusetts business owners into signing long-term contracts with claims that the company would provide them with discounts on local, long distance, wireless and Internet service. Reilly charges the promises, outlined in contracts that required the businesses to pay $300 - $2300 per month for up to five years, are empty.
"Hard-working small businesses were deceived into signing long-term contracts, costing most of them thousands of dollars, for services they have not received," Reilly said. "This scheme can not be allowed to continue. This lawsuit seeks to free businesses from these contracts and to refund the costs they've already incurred."
Reilly alleges in the lawsuit that NorVergence, now in Chapter 7 bankruptcy proceedings in New Jersey, failed to disclose key facts to small business customers who thought they were getting discounts on phone and Internet service. Instead, these customers received a worthless black box called a "Matrix" but no phone or Internet services.
To make matters worse, NorVergence assigned these customers' contracts to several out-of-state financing companies. In many instances, these assignments were done without the customers' knowledge or consent. Reilly said many NorVergence customers in Massachusetts now find themselves forced to either pay thousands of dollars for services they are not receiving, or else fight the financing companies and risk collection actions and default judgments in other states.
In the lawsuit, Reilly alleges that NorVergence failed to disclose material terms and conditions in its advertisements, rental agreements and related contracts, including a customer obligation to pay regardless of whether the Matrix box worked or NorVergence provided telecommunications and Internet service. The lawsuit also alleges that NorVergence failed to disclose clearly that the customers waived all defenses they may have to the contracts, and that all legal challenges would occur where NorVergence, or the assigned financing company, chose to file suit.
Through its bankruptcy court trustee, Reilly is asking the court to stop NorVergence from enforcing the contracts, to pay consumers back for services not rendered, and to fine NorVergence with penalties and litigation costs. Massachusetts joins a growing group of state Attorneys General and the Federal Trade Commission in challenging the NorVergence contracts. NorVergence began offering local and long distance voice, data and Internet service in Massachusetts in March 2003.
