Harris Jewelry, a now-defunct jewelry retailer that government officials said had preyed on military families by selling them overpriced baubles using high-interest loans, will pay millions in refunds and stop collecting on its loans in a settlement deal announced on Wednesday by the Federal Trade Commission and 18 state attorneys general.
The company ran a small chain of stores near military bases and specialized in selling service members jewelry and commemorative items with financing that often left the buyers mired in debt, according to prosecutors. The company also made false claims, they said, such as promising to donate the proceeds from some items to charity but failing to follow through.
“Today’s action will help thousands of service members get back on their feet after falling victim to Harris Jewelry’s schemes,” said New York State’s attorney general, Letitia James, whose office sued Harris Jewelry in 2018. “Predatory lenders and businesses harming service members should be warned that their actions will not be tolerated.”
Harris Jewelry closed its stores last year. The settlement requires the company, which is based in Hauppauge, N.Y., to cease collections on $21 million in loans still held by 13,000 service members. It must also issue nearly $13 million in refunds to 46,000 people who paid for “lifetime protection plans” on their purchases — an add-on that was supposedly optional but that was often added without a buyer’s awareness, prosecutors said.
Those eligible for compensation will receive an email and a mailed letter about the settlement agreement.
Harris Jewelry, which did not admit or deny the allegations, said in a written statement that it would not reopen its stores. The settlement “resolves these matters in the best interests of all of its stakeholders,” the company said.
Predatory lending to members of the military is an area of growing concern for regulators and watchdogs; soldiers’ steady paychecks — and the financial naïveté of many young recruits — are a potent lure for hucksters. Ms. James’s office cited Harris Jewelry’s “Mother’s Medal of Honor” necklace as an example of its tactics: The company bought the item from its wholesaler for less than $78 and sold it for $799. Taxes, fees and the protection plan took the total price that many buyers paid to nearly $975.
When buyers fell behind on their payments, Harris Jewelry reported the delinquencies to credit agencies, harming the customers’ credit scores. As part of Wednesday’s settlement, the company agreed to direct the credit bureaus to delete those negative entries.