Attorney General Tong announces multi-state agreement to recover $34.2 million for thousands of US service members defrauded by Harris Jewelry
Harris Jewelry must provide refunds, stop collecting debts and fix bad credit scores for more than 46,000 service members and veterans nationwide
(Hartford, CT) – Attorney General William Tong today 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 charity promises and deceptive marketing ploys to lure active-duty military members into their financing program, falsely claiming that investing in the program would improve military members’ credit scores. Instead, servicemen were tricked into getting high-interest loans on overpriced, shoddy jewelry that saddled them with thousands of dollars in debt and worsened their credit. The deal requires Harris Jewelry to reimburse tens of thousands of service members for warranties they were tricked into buying, stop collecting millions of dollars in debt, fix bad credit ratings and dissolve all operations by Harris Jewelry. This agreement also obligates Harris Jewelry to pay $1 million to the 18 states.
More than 100 Connecticut service members and veterans will receive $128,964.50 in debt refunds and relief, and the State of Connecticut will collect a $50,000 fine.
“Harris Jewelry preyed on active duty military, luring them into bad loans and collateral for overpriced cheap jewelry. Harris Jewelry has lied about charitable donations, lied about credit ratings, lied about their shoddy products, and ripped off American Heroes out of millions of dollars. Our deal forces them to shut down and demands direct repayments and debt relief for tens of thousands of service members. We’ve started contacting 100 Connecticut service members and veterans who we know have fallen victim to this egregious scam and are eligible for help. 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 of many victims being defrauded of funds, trapped in a cycle of debt due to scams like the one perpetrated by Harris Jewelry. My thanks to Attorney General Tong and his team and 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 to its victimization of our nation’s heroes, the protectors of our freedom and democracy.Harris Jewelry has targeted those heroes who volunteer to serve and sacrifice for our nation by ripping them off with hard-earned dollars and ruining their The Harris Jewelry scam was even more despicable because it was veiled in patriotic rhetoric and falsely claimed to support veteran charities in an effort to effectively steal military money. areas. This consent order sends a strong message that state attorneys general and the FTC will not condone such unlawful predatory behavior,” said Connecticut Veterans Affairs Commissioner Thomas J. Saadi.
Connecticut consumers who believe they have been victims 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 the city where the store was located, the period of purchase and the consumer’s address at the time of purchase. The Office of the Attorney General will help consumers navigate the claims process.
Harris Jewelry, headquartered in Hauppauge, New York, operated retail stores near and on military bases across the country. Their business model was designed to primarily target and serve the military. A multi-state investigation found local military members were lured into retail stores through a marketing program, dubbed “Operation Teddy Bear,” in which Harris Jewelry advertised teddy bears in uniforms service members with charitable pledges. The multi-state investigation revealed that no legal contract was ever signed between Harris Jewelry and the charity it claimed to support. Additionally, consumers received varying and conflicting information about the amount donated to the charity. Sometimes they were told that all of the profits would be donated, other times they were told only a portion would be donated.
Additionally, Harris Jewelry offered the military predatory loan contracts marketed to the military as a way to establish or improve their credit ratings. Credit extended to service members through the Harris program was not based on consumer credit score, potential income, or other legitimate factors considered by the banks. Rather, it was based on a serviceman’s branch of service, how much time they had left over their enlistment duration, and the category of goods they purchased. Servicemen were led to believe that they were investing in the Harris program and that the jewelry they had purchased was a gift from Harris Jewelry.
The jewelry itself was grossly overpriced and of poor quality. The multistate investigation found that the company significantly inflated the retail price of its products, typically by multiplying its wholesale price by six or seven times, and in some cases by ten times the wholesale price. For example, Harris Jewelry bought its popular Mother’s Medal of Honor for $77.70 but sold it for $799. The jewelry was not worth the price, and consumers often reported stones falling off, chains breaking, and the finish fading.
Harris offered the military jewelry protection plans, which they said were optional but were added to almost every eligible transaction without their knowledge. Protection plan costs ranged from $39.99 to $349.99, depending on the retail price of the item. In some cases, the cost of the protection plan exceeded the wholesale price paid by Harris for the item. Protection plans have been added to a consumer’s retail contract as standard practice without disclosure to the consumer.
With the inflated purchase price, protection plans, taxes, shipping and handling, teddy bears and other charges, the servicemen were charged more than they were initially told. Using the $799 Mother’s Medal of Honor as an example, the military was billed $79.99 for a protection plan, taxes, and other fees, bringing the main total cost to $974.31. At an interest rate of 14.99% over a 10-month period, the total amount paid by a member ended up being $1,039.26 for the Mother’s Medal of Honor.
Harris Jewelry used charity appeals as a marketing tactic to trick the military into deceptive and costly in-house funding deals for very expensive jewelry. Jewelry was of poor quality, prices were highly inflated, finance contracts had hidden fees, and payments were tied directly to military paydays.
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 relating to jewelry sales and financing to members of the military.
Specifically, the attorneys general and the FTC allege that Harris Jewelry:
• Made false or unsubstantiated statements that financing jewelry purchases through the company would lead to higher credit scores: the company told the military that it would get a significant improvement in their credit score entering into a retail contract with Harris Jewelry when in fact that was not true in many cases.
• Wrongly stated that the protection plan was necessary to fund purchases: As part of the sale of military-themed jewelry and gifts, Harris Jewelry offered a protection plan that covered ring and watch sizing, replacement batteries and repairs. On several occasions, the company gave the false impression that the protection plan was not optional or was necessary to finance the purchase, when in fact it was optional.
• Failed to Provide Written Disclosures and Failed to Meet Clearance Requirements for Contracts as Required by Law: Harris Jewelry failed to include written disclosures in its retail contracts as required the Truth in Lending Act and the Military Loans Act and has failed to meet the authorization requirements required by the Electronic Fund Transfers Act. Its Internet and print advertisements also failed to include the required disclosure of truth in the loans. The company also failed to provide written notice as required by the FTC Holder Rule in its contracts and failed to make oral disclosures at the time of sale as required by the Military Loans Act.
Today’s agreement requires Harris Jewelry to stop collecting $21,307,229 in debts held by 13,426 service members and repay $12,872,493 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 remove all negative credit entries reported to consumer reporting agencies.
Service members and veterans who took out a predatory finance loan with Harris Jewelry between January 2014 and July 2022 will be eligible for restitution as long as they paid the collateral. An independent monitor will be set up to oversee relief and contact eligible service members and veterans. Eligible service members and veterans will receive an email and letter mailed to the last known address on company records advising them of this agreement and their eligibility, service members must then claim their return.
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 join the FTC in the agreement to ‘today.
Assistant Attorney General Kim McGee and Assistant Deputy Attorney General Michael Wertheimer, Chief of the Consumer Protection Section, assisted the Attorney General in the case.