Consumer News

AG Derek Schmidt announces agreement to eliminate jewelry debt, recover refunds for Kansas servicemembers

Release Date: Jul 26, 2022

TOPEKA – (July 26, 2022) – Kansas reached a settlement on behalf of more than 1,300 Kansas consumers, mostly servicemembers and veterans, who were defrauded by national jewelry retailer Harris Jewelry, Kansas Attorney General Derek Schmidt said today.

The settlement was part of a nationwide effort involving 18 states, including Kansas, and the Federal Trade Commission, resulting in the recovery of $34.2 million for more than 46,000 servicemembers and veterans nationwide.

Schmidt said the New York-based jewelry company used deceptive marketing tactics to lure active duty servicemembers to their financing program, falsely claiming that investing in the program would improve their credit scores. Instead, servicemembers were tricked into obtaining high-interest loans on overpriced, poor quality jewelry that left servicemembers with thousands of dollars of debt and damaged their credit. Harris Jewelry operated retail stores near and on military installations nationwide, including in Manhattan, near Fort Riley. The Kansas location was closed during the course of the investigation.

According to the terms of the settlement, Harris Jewelry will cease collecting debt payments, totaling $293,857.03, and refund $342,905.58 for protection plan fees, for approximately 1,350 Kansas consumers, the vast majority of whom were military members or their families. Harris Jewelry is also required to correct bad credit scores of consumers and dissolve all of its businesses.

Harris Jewelry’s business model was designed to primarily target and service people in the military. A previous multi-state investigation found that local servicemembers 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. Investigators found that no legal contract was actually signed between Harris Jewelry and the charity it claimed to support, and consumers were often given varying and conflicting information about the amount donated to the charity.

Schmidt said Harris Jewelry then used this charity connection as a marketing tactic to lure servicemembers into high-priced, deceptive in-house financing contracts for vastly overpriced jewelry, which included finance contracts with hidden fees and payments tied directly to the military pay days.

The filings allege that Harris Jewelry violated the Kansas Consumer Protection Act, the FTC Act, the Truth in Lending Act, the Electronic Fund Transfer Act, the Military Lending Act, the Holder Rule, and laws in other states in connection with jewelry sales and financing to members of the military.

Consumers 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 consumers. Eligible consumers will receive an email and letter in the mail notifying them of this agreement and their eligibility, consumers will then have to claim their restitution.

A copy of the consent judgment approved July 21 by the U.S. District Court for the Eastern District of New York can be found at http://www.inyourcornerkansas.org/judgments.

More information on staying safe from scams is available on the attorney general’s consumer protection website at www.InYourCornerKansas.org. If you suspect a scam or fraud, you can file a complaint with our Consumer Protection Division online at the aforementioned website or by calling (800) 432-2310.

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