Twenty-three Ventura County residents who bought water purification systems from a now-defunct company are among several hundred statewide who could share $2.75 million in refunds after a settlement to a civil lawsuit was reached Tuesday.
Northland Environmental Inc., which went out of business in 1990, used high-pressure sales techniques and scare tactics to persuade consumers to purchase the purification systems at inflated prices, said Ventura County Deputy Dist. Atty. Gregory Brose.
"We think it was double of what is normally charged," Brose said of Northland's $7,000 price tags.
Among the several complaints filed with the district attorney's office were charges that Northland had violated the state's business code, which allows consumers 72 hours to back out of a home-improvement contract when the same company does the work and provides the financing.
"Northland did the selling, the installing and the financing," Brose said. "They had also made statements that their system would remove the AIDS virus from the water," which Brose called "an outrageous fraud."
Northland also installed the systems immediately after making the sales, Bose said, leading consumers to believe that they could not rescind their contracts.
"We call this 'spiking the contract,' " said Brose.
The company ceased operating in Ventura County in 1988 and had gone out of business statewide by 1990. Chrysler First Financial Services Corp. of California purchased the financing paper from Northland and has agreed to settle the suit with the state and county.
Chrysler First, headquartered in Allentown, Penn., also agreed to provide $1 million in warranty service to consumers.
Consumers who financed their purchases with Chrysler First, but did not receive a notice of right to rescind will be partially reimbursed. Consumers who canceled their contracts in writing or against whom the company filed liens for non-payment are also eligible for restitution, Brose said.