Harris Jewelry, a national retail chain, has agreed to settle charges brought by the Federal Trade Commission (FTC) and officials in 18 states. Regulators claimed the company used deceptive sales tactics against US active-duty personnel.
Under the terms of the settlement, the company will pay $1 million to the 18 states and provide $34 million in compensation to affected consumers.
The complaint accused Harris Jewelry of deceptively marketing overpriced, shoddy jewelry to members of the armed forces and including “protection plans” in the price without disclosing it.
According to the FTC, the company falsely told customers that financing jewelry purchases through Harris would boost military credit scores. As part of the settlement, the company agreed to stop collecting $21 million in outstanding debt.
Violation of the Military Loans Act
The complaint also includes an accusation that the jewelry company violated the Military Loans Act (MLA), the first time the FTC has taken action under that law. Under the MLA, interest rates charged to military personnel are capped at 36% APR.
“Today’s action against Harris Jewelry shows that companies that target our country’s service members with false promises and deceptive sales practices will face serious consequences,” said Samuel Levine, director of the FTC Consumer Protection Bureau.
New York Attorney General Letitia James led the 18-state investigation and called the company’s marketing efforts “abhorrent.” She said the Hauppauge, New York-based company voluntarily located its retail stores near military bases.
“Harris Jewelry claimed to serve and support our troops, but its business practices were entirely self-serving,” James said. “For years, Harris Jewelry has cheated the military and burdened them with thousands of dollars in debt.”
James also said the company charged up to $349 for a merchandise protection plan, but did not disclose the fee to the buyer. She said she received complaints about stones falling out of their settings, broken chains and discolored jewelry finishes.
“Operation Teddy Bear”
James conducted a multi-state investigation that found the military had been lured into retail stores through a marketing program dubbed “Operation Teddy Bear.” The scheme allegedly involved advertising teddy bears in military uniforms while promising charitable donations.
The investigation revealed that there was no legal contract between the company and Operation Troop Aid, Inc., which Harris claimed to support. James said consumers often received varying and conflicting information about the amount donated to the charity.
Under the consent order, Harris Jewelry will contact consumers entitled to refunds for protection plans and will also post a notice on its website regarding the availability of refunds. Consumers who have specific questions about obtaining a remedy may contact the New York State Attorney General’s Office at (315) 523-6080.