Attorney General William Tong on Thursday announced a $34.2 million settlement between 18 states, the Federal Trade Commission (FTC) and Harris Jewelry that will provide refunds and relief to 46,000 service members and veterans deceived and defrauded by the national jewelry retailer.
The jewelry company used false promises of charity and deceptive marketing ploys to lure active-duty service members to their financing program, falsely claiming that investing in this program would improve service members’ credit scores. Instead, service members were tricked into obtaining high-interest loans on overpriced, poor-quality jewelry that saddled them with thousands of dollars of debt and worsened their credit.
The agreement requires Harris Jewelry to refund tens of thousands of service members for warranties they were tricked into purchasing, to stop collecting millions of dollars of debt, to correct bad credit scores, and dissolves all of Harris Jewelry’s businesses. This agreement also requires Harris Jewelry to pay $1 million to all 18 states.
Over 100 Connecticut service members and veterans will receive $128,964.50 in refunds and debt relief, and the State of Connecticut will collect a $50,000 penalty.
“Harris Jewelry preyed on active-duty service members, luring them into bad loans and warranties for overpriced cheap jewelry. Harris Jewelry lied about charitable donations, lied about credit scores, lied about their low-quality products, and scammed American heroes out of millions of dollars. Our agreement forces them out of business and requires direct refunds and debt relief to tens of thousands of servicemembers. We have begun reaching out to 100 servicemembers and veterans in Connecticut who we know were victims of this egregious scam and are entitled to relief. There may be more. If you were a Harris Jewelry customer, contact our office immediately,” said Attorney General Tong.
“As a veteran and member of the Army Reserve, I have heard from many victims scammed out of funds, trapped in a cycle of debt because of scams like that perpetrated by Harris Jewelry. My thanks to Attorney General Tong and his staff and to the multi-state team co-led by New York and the FTC for their work to recover millions of dollars for members of our military and bring an end to Harris Jewelry and its victimization of our nation’s heroes, the protectors of our freedom and democracy. Harris Jewelry targeted these heroes who volunteer to serve and sacrifice for our nation by scamming them out of hard-earned dollars and ruining their credit. Harris Jewelry’s scam was even more despicable as it was veiled with a patriotic pitch and falsely claimed to support veteran charities all with the goal of effectively stealing service members’ money. This Consent Order sends a strong message that state Attorneys General and the FTC will not tolerate such illegal predatory behavior,” said Connecticut Veterans Affairs Commissioner Thomas Saadi.
Connecticut consumers who believe they may have been a victim of this Harris fraud should file a consumer complaint online (https://www.dir.ct.gov/ag/complaint/) and provide the Harris store address and/or town where the store was located, the time frame of purchase, and consumer address at the time of purchase. The Office of the Attorney General will assist consumers in navigating the claims process.
Harris Jewelry, headquartered in Hauppauge, New York, operated retail stores near and on military bases around the country. Their business model was designed to primarily target and service people in the military. A multi-state investigation found that local service members were enticed into retail stores through a marketing scheme, dubbed “Operation Teddy Bear,” in which Harris Jewelry advertised teddy bears in military uniforms with promises of charitable donations. The multi-state investigation found- that no legal contract was ever signed between Harris Jewelry and the charity it claimed to support. Moreover, consumers were given varying and conflicting information about the amount donated to the charity. Sometimes they were told all the proceeds would be donated, other times they were told only a portion would be donated.
In addition, Harris Jewelry offered servicemembers predatory lending contracts marketed to servicemembers as a way to build or improve their credit scores. The credit advanced to servicemembers through the Harris Program was not based on a consumers’ credit score, potential income, or other legitimate factors that banks consider. Rather, it was based on a servicemember’s branch of service, the amount of time they have remaining on the term of enlistment, and the category of merchandise they purchased. Servicemembers were led to believe that they were investing in the Harris Program and the jewelry they purchased was a gift from Harris Jewelry.
The jewelry itself was significantly overpriced and poor quality. The multistate investigation found that the company dramatically inflated the retail price of its products, generally by multiplying its wholesale cost by six or seven times, and in some cases ten times the wholesale cost. For example, Harris Jewelry purchased its popular Mother’s Medal of Honor at $77.70 but sold it at $799. The jewelry was not worth the price and consumers often reported stones falling out, chains breaking, and the finish fading.
Harris offered service members protection plans on the jewelry, which they claimed was optional but was added to nearly all eligible transactions without their awareness. The costs of the protection plans ranged from $39.99 to $349.99, depending on the retail price of the item. In some instances, the cost of the protection plan exceeded the wholesale cost Harris paid for the item. Protection plans were added to a consumer’s retail installment contract as a routine practice without disclosure to the consumer.
With the inflated purchase price, protection plans, taxes, shipping and handling fees, teddy bears, and other fees, service members were charged more than they were initially told. Using the $799 Mother’s Medal of Honor as an example, service members were charged $79.99 for a protection plan, taxes, and other fees, bringing the total principal cost to $974.31. At a 14.99 percent interest rate over a 10-month period, the total amount paid by a service member ended up being $1,039.26 for the Mother’s Medal of Honor.
Harris Jewelry used charity pleas as a marketing tactic to dupe service members into high-priced, deceptive in-house financing contracts for vastly overpriced jewelry. The jewelry was poor quality, the prices were highly inflated, finance contracts had hidden fees, and the payments were directly tied to the military pay days.
According to today’s consent order, 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 laws in connection with jewelry sales and financing to members of the military.
Specifically, attorneys general and FTC allege 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 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 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.
Today’s agreement requires Harris Jewelry to stop collecting $21,307,229 in outstanding debt that is held by 13,426 service members and to provide $12,872,493 in refunds to 46,204 service members who paid for protection plans. Harris Jewelry is also required to vacate judgments against 112 consumers totaling $115,335.64 and delete any negative credit entries reported to consumer reporting agencies.
Service members and veterans who entered into a predatory financing loan with Harris Jewelry between January 2014 and July 2022 will be eligible for restitution to the extent they paid for warranties. An independent monitor will be installed to oversee the relief and contact eligible servicemembers and veterans. Eligible service members and veterans will receive an email and letter in the mail at the last known address according to company records notifying them of this agreement and their eligibility, service members will then have to claim their restitution.
Joining the FTC in today’s agreement are the attorneys general of California, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Louisiana, Maryland, Nevada, New York, North Carolina, Pennsylvania, Virginia, and Washington.
Assistant Attorney General Kim McGee and Deputy Associate Attorney General Michael Wertheimer, Chief of the Consumer Protection Section assisted the Attorney General in this matter.