FTC and 18 States Sue to Stop Harris Jewelry from Cheating Military Families with Illegal Financing and Sales Tactics

The Federal Trade Commission and a group of 18 states sued national jewelry retailer Harris Jewelry to stop the company from cheating military families with illegal financing and sales practices. According to the complaint, the jewelry company deceptively claimed that financing jewelry purchases through Harris would raise servicemembers’ credit scores, misrepresented that its protection plans were not optional or were required, and added the plans to purchases without consumers’ consent. The complaint also includes a charge that the jewelry company violated the Military Lending Act, the FTC’s first action under this Act.

Under a proposed order with the FTC and multistate group, the company must stop collection of millions of dollars in debt, provide approximately $10.9 million in refunds for purchased protection plans, provide refunds for overpayments, and assist with the deletion of any negative credit entries pertaining to debt in consumers’ credit reporting file. The company also is required to complete its shutdown of operations and to dissolve pursuant to applicable state laws, once it meets the obligations of the order.

“Today’s action against Harris Jewelry shows that companies that target our country’s servicemembers with false promises and deceptive sales practices will face serious consequences,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC is committed to working with state enforcers to halt unfair and deceptive business practices across the marketplace. We are grateful for their partnership in this case, which allowed us to deliver strong relief for servicemembers.”

“It’s abhorrent that Harris Jewelry built their business by taking advantage of young servicemembers risking their lives to protect our country,” said New York Attorney General Letitia James. “Harris Jewelry claimed to serve and support our troops, but its business practices were entirely self-serving. For years, Harris Jewelry misled military members and saddled them with thousands of dollars of debt. My office joined forces with the FTC and 17 other states to protect servicemembers from Harris Jewelry and combat their predatory practices. Today’s action will help thousands of servicemembers get back on their feet after falling victim to Harris Jewelry’s schemes. Our troops bravely put our protection above their own and deserve to be treated with integrity and respect. Predatory lenders and businesses harming servicemembers should be warned that their actions will not be tolerated.”

“The Department of Defense appreciates the work of the FTC and other partners in protecting servicemembers and their families from such harmful practices and in securing appropriate remedies,” said Gilbert R. Cisneros, DoD Under Secretary of Defense for Personnel and Readiness. “We believe these efforts contribute to servicemembers’ overall financial well-being and readiness.” 

According to the complaint, Harris Jewelry violated the FTC Act, the Truth in Lending Act, the Electronic Fund Transfer Act, the Military Lending Act, the Holder Rule; and state law in connection with jewelry sales and financing to members of the military. Specifically, the FTC alleges that Harris Jewelry:

• Made false or unsubstantiated claims that financing jewelry purchases through the company would result in higher credit scores: The company told servicemembers that they would achieve a significant improvement in their credit score by entering into a retail installment contract with Harris Jewelry and making all payments on time when, in fact, that was not true in many instances.
• Misrepresented that the protection plan was required to finance purchases: In connection with the sale of jewelry and military-themed gifts, Harris Jewelry offered a protection plan that covered ring and watch sizing, battery replacements, and repairs. In several instances, the company offered items for sale and gave the false impression that the protection plan was not optional or was required to finance the purchase, when it was in fact optional. 
• Failed to provide written disclosures and meet authorization requirements for contracts as required by law: Harris Jewelry failed to include written disclosures in its retail installment contracts as required by the Truth in Lending Act and Military Lending Act, and meet authorization requirements as required by the Electronic Fund Transfer Act. Its internet and print ads also failed to include the required Truth in Lending disclosure. The company also failed to provide written notice as required by the FTC’s Holder Rule in its contracts, and failed to make oral disclosures at the time of sale as required by the Military Lending Act.

Enforcement Action

In addition to requiring the company to come into compliance with the Military Lending Act, Truth in Lending Act, Electronic Fund Transfer Act, and Holder Rule, the proposed order requires Harris Jewelry to:

• Stop collection of millions in debt;
• Refund approximately $10.9 million for purchased protection plans;
• Provide refunds for overpayments;
• Contact consumer reporting agencies and request deletion of negative credit entries and counterorder outstanding judgments against consumers;
• Stop misrepresentations and baseless claims;
• Stop marketing, offering for sale or financing, and selling or financing ancillary products;
• Stop selling, assigning, or transferring retail installment contracts or other consumer debt to other persons; and
• Complete its shutdown of operations, and dissolve following state law, once the order requirements are met.

Under the order, Harris Jewelry will contact consumers entitled to refunds for the protection plans, and must also post a notice on its website about the availability of refunds. Consumers who have specific questions about obtaining redress may contact the New York State Attorney General’s Office at (315) 523-6080.  

The FTC and states are grateful for the Department of Defense’s coordination and support on this matter.  

The Commission vote approving the stipulated final order was 5-0. The FTC filed the proposed order in the U.S. District Court for the Eastern District of New York.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.