Better Business Bureau: Jewelry retailer ripped off service members
A more accurate slogan for some companies that claim to “Support Our Troops” could be “Thwart Our Troops.” So said an FTC official in describing a joint enforcement action by the FTC and 18 States against a jewelry retailer they allege cheated military families with illegal financing and deceptive sales practices. The complaint included a charge that the company violated the Military Lending Act, the FTC’s first action under the Act.
Harris Jewelry, a national retailer based in New York, and affiliated companies sold jewelry, watches, and military-themed gifts through stores located on or near military bases. Using the slogan “Serving Those Who Serve,” the company tailored its sales pitch to young recruits in the lowest pay grades, including those still in basic training. Almost all of the sales were on credit and it touted that the “Harris Program” would help servicemembers improve their credit scores. It told customers reluctant to buy on credit that they “can’t afford not to.”
In one ad the FTC describes as “eye-catching,” Harris claimed that buying its jewelry on credit and making timely payments would allow the borrower to save more than $12,000 in interest when financing a car in the future. The ad displayed two scenarios – financing with good credit and financing with bad or no credit. Good credit would lead to a 6 percent interest rate and $387 monthly payment on a $20,000 car loan. The interest rate and payment for a person with bad credit would be 26 percent and $599.
The FTC and States allege that Harris had no basis for making such representations and that using Harris’ financing resulted in negative financial consequences for many military borrowers who were overburdened with substantial payments. One Harris customer complained to the BBB that “I was taken advantage of through predatory practices to swindle new barely 18 year old service members. They claim they support troops because they donate some money here and there, but in reality that money they receive was unethically stripped from YOUNG SOLDIERS pockets, hurting them.” He said the jewelry he paid $1,800 for was later appraised as worth only $100.
The FTC and States also said Harris misrepresented that a protection plan was required to finance purchases. Some buyers knowingly or unknowingly paid up to $349.99 for plans that covered things like ring and watch sizing and battery replacement. And the company failed to include disclosures in its retail installment contracts that are required by the Truth in Lending Act and Military Lending Act.
The proposed settlement order requires Harris to stop collecting on millions in debt, refund approximately $10.9 million it took in through protection plans, ask the credit bureaus to delete negative credit entries, and counterorder outstanding judgments against customers. The company must also complete a shutdown of its operations once it meets the requirements of the order. It’s not clear from the FTC alerts whether the regulators forced the company to shut down or if the enforcement action, financial penalties, and prohibition of its business practices made continuing to operate impossible.
The FTC offers this advice to other businesses:
Claims about credit improvement require substantiation.
Add-ons require consumers’ express informed consent.
Aiming illegal practices at members of the military will arouse law enforcement’s ire.
Randy Hutchinson is president & CEO Better Business Bureau of the Mid-South. This column is in partnership with Better Business Bureau of Middle Tennessee & Southern Kentucky.
This article originally appeared on Jackson Sun: Better Business Bureau: Jewelry retailer ripped off servicemembers
