Harris Jewelers preyed on military personnel with inferior jewelry, exorbitant prices, and lines of credit
TACOMA — Attorney General Bob Ferguson announced today that national jewelry business Harris Jewelers will provide more than $1.5 million in debt relief and refunds for more than 1,000 Washington military service members. The company targeted active-duty military personnel and tricked them into signing contracts that Ferguson claimed violated the federal Lending Act and the state Consumer Protection Act.
Harris Jewelers has closed all of its stores, including a store in the Tacoma Mall it operated for just a few years, and is now only servicing products purchased online. It had stores in 17 states, all located near military bases, and its company motto was “Serving Those Who Serve”.
“Harris Jewelers did a disservice to those who served,” Ferguson said. “I am proud of my office’s proven track record of shutting down businesses and charities that exploit military personnel. Our work to protect military personnel in Washington state doesn’t stop there.”
Today’s announcement is part of a multi-state resolution. To avoid a trial in the U.S. District Court for the Eastern District of New York, Harris Jewelers will stop collecting $21.3 million worth of contracts statewide and more than $12.8 million to tens of thousands reimbursed by service members across the country who have purchased Harris’ Extended Warranties, also known as “Jewelry and Watch Protection Programs”.
Under the terms of the ruling, Harris Jewelers will stop collecting $911,525 in debt for 547 Washington service members who shopped at the company’s stores, an average of approximately $1,666 per customer. As part of a separate claims process, $597,925 will be divided among 1,804 people who are eligible for reimbursement based on the guarantees they purchased.
The Attorney General’s Office and Harris Jewelers are notifying service members who made purchases through their jewelry and watch protection program of their right to a refund. Harris Jewelers will email all service members who receive debt relief. Some service members receive both debt relief and a refund of additional service fees depending on the programs they used at Harris Jewelers.
In addition, the company must pay $50,000 to the state of Washington, which the attorney general’s office will split among four armed forces auxiliaries that support active duty personnel in Washington. These organizations provide interest-free loans to service members who need financial assistance. Here’s how the Attorney General’s office will split that money among these organizations, reflecting in part the respective active population of each service in Washington:
Harris Jewelers is also facing a suspended civil penalty of $24 million for complying with changes in its business practices required by law.
Harris Jewelers’ hidden charges amounted to illegal interest charges
Harris Jewelers focused almost exclusively on selling to service members on credit. It also advertised special rates and offers for members of the military, but in reality these offers were either illusory or always available.
Investigators and attorneys discovered that Harris Jewelers was hiding the true cost of the jewelry being sold, using high markups in combination with fake discounts, and then adding hidden fees, maintenance plans, and other costs to raise the price. These plans could add $100 to over $1,000 over the entire long termTerm Costs for Service Members.
The additional fees and price increases allowed the company to claim to service members that it had not violated high interest laws. The Military Loan Act limits the interest rate a company can charge military personnel to 36%. Harris Jewelers used a lower interest rate than this, around 15%, but the inflated cost of his jewelry and his additional fees resulted in a much higher interest rate. Ferguson claimed this was an unfair and deceptive business practice.
As an example of how this behavior worked, Harris Jewelers was able to value a $200 diamond ring at $1,500. On top of that, it would then receive hundreds of extra dollars in interest fees and hundreds more in additional fees, which it aggressively marketed to consumers when they originally bought the ring.
Washington led the investigation into Harris Jewelers’ business practices along with the Federal Trade Commission, New York, Nevada, North Carolina and Virginia. Also participating in the investigation and settlement were attorneys general from California, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Louisiana and Maryland.
Assistant Attorney General John Nelson handled the case for the Attorney General’s office.
How to avoid similar robbery deals
When it comes to jewelry, compare costs and look at the market. Also, make sure the jeweler uses industry standards to price their products: carat weight, clarity, color, and cut. Harris Jewelers did not live up to these standards and offered inferior jewels at high prices.
Consumers should also be wary of hidden costs like excessive guarantees and fees. You can check if a company has registered a guarantee with the Federal Insurance Agency here: https://fortress.wa.gov/oic/consumertoolkit/Search.aspx.
Harris Jewelers has not registered its warranty programs with the state in violation of state law.
Previous court wins against corporations that exploit service members
In 2016, USA Discounters provided more than $2.1 million in grants to 2,400 military personnel and veterans who signed their contracts in Washington state. Ferguson and 47 other attorneys general alleged that discount stores in the US sold overpriced home goods at high interest rates and often used the military’s allotment system to guarantee payment. The company obtained business through misrepresentations and omissions in advertising, during the making of a loan, and during the debt collection process.
Discount stores in the US owned other businesses that sold furniture, appliances, televisions, computers, smartphones, jewelry, and other consumer goods primarily on credit. US discounters typically market military personnel and veterans and advertise that they will not be denied credit.
In 2015, Freedom Stores provided $63,000 to service members following investigations into alleged unfair debt collection practices and false advertising in several states. Alleged violations included filing lawsuits against members of the Washington military service in Virginia without their knowledge and contacting commanding officers with details of a serviceman’s debt.
The Virginia company, which closed its only Washington store near Joint Base Lewis-McChord in August 2015, sold furniture, electronics, jewelry and other goods primarily to military service members.
Ferguson’s priority is providing legal assistance to military members and veterans
Ferguson has an ongoing Military and Veterans Initiative to advocate for Washington’s active military and veterans. It includes engaging and educating service members and veterans about their rights and the resources available to them, vigorously enforcing legal protections within the Attorney General’s powers, and promoting and facilitating access to civilian legal services.
The Attorney General’s Office of Military & Veteran Legal Assistance (OMVLA) Office of Military & Veteran Legal Assistance (OMVLA) was created at the request of the attorney general at the 2017 session to promote access to civilian legal services for current and former Washington military personnel and to facilitate. OMVLA has the authority to recruit and train volunteer attorneys, maintain a directory of available services and volunteers, review requests for legal assistance, and refer such requests to registered volunteer attorneys and legal assistance providers.
Washington’s attorney general serves the people and the state of Washington. As the largest law firm in the state, the Attorney General’s Office provides legal representation to all state agencies, boards and commissions in Washington. In addition, the office serves people directly by enforcing consumer protection, civil rights and environmental protection laws. The bureau also prosecutes cases of elder abuse, Medicaid fraud, and sexually violent predator cases in 38 of Washington’s 39 counties. Visit www.atg.wa.gov to learn more.
Brionna Aho, communications director, (360) 753-2727; [email protected]
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