Attorney General Ford Joins Multistate Agreement Recovering $34.2 Million for U.S. Servicemembers Defrauded by Harris Jewelry

July 20, 2022

Carson City, NV – Today, Attorney General Aaron D. Ford announced he has joined a multistate agreement that recovers $34.2 million for more than 46,000 servicemembers and veterans who were deceived and defrauded by the national jewelry retailer Harris Jewelry. The agreement is co-led by New York Attorney General’s office and the Federal Trade Commission (FTC). 

Harris Jewelry, headquartered in Hauppauge, New York, used deceptive marketing tactics to lure active-duty servicemembers to their financing program, falsely claiming that investing in this program would improve servicemembers’ credit scores. Instead, servicemembers 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 18-state agreement requires Harris Jewelry to refund tens of thousands of servicemembers for warranties they were tricked into purchasing; to stop collecting millions of dollars of debt; and to correct bad credit scores. The agreement also dissolves all of Harris Jewelry’s businesses. 

“Today’s agreement should stand as an example of what will happen to businesses who defraud our citizens and our servicemembers,” said AG Ford. “Harris Jewelry specifically targeted our servicemembers – men and women who defend our country – and defrauded them out of millions. I am proud to say that they have been brought to justice.”

Today’s agreement requires Harris Jewelry to stop collecting $21,307,229 in outstanding debt that is held by 13,426 servicemembers and to provide $12,872,493 in refunds to 46,204 servicemembers 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.

Under the terms of the agreement, 48 Nevada consumers will receive automatic debt forgiveness in the amount of $66,348.91, and 173 Nevada consumers who participated in Harris Jewelry’s Lifetime Jewelry Watch and Protection Plan between Jan.1, 2014 and the date of entry of order can apply for restitution from a total of $46,670.64. The state will also receive $50,000.

Harris Jewelry 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 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. The investigation found that no legal contract was 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.

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, the investigators 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 a retail installment contract with Harris Jewelry when that was not true in many instances. 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.

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. 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.

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.

The jewelry itself was significantly overpriced and poor quality. The 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 10 times the wholesale cost. For example, Harris Jewelry purchased its popular Mother’s Medal of Honor at $77.70 but sold it at $799.

Service members were often charged much more than they were initially told. Using the $799 Mother’s Medal of Honor as an example, servicemembers were charged $79.99 for a protection plan, taxes and other fees, bringing the total principal cost to $974.31. At a 14.99% interest rate over a 10-month period, the total amount paid by a servicemember ended up being $1,039.26 for the Mother’s Medal of Honor.

An independent monitor will be installed to oversee the relief and contact eligible servicemembers and veterans. Eligible servicemembers and veterans will receive an email and letter in the mail notifying them of this agreement and their eligibility, servicemembers will then have to claim their restitution.

AG Ford joins the New York Attorney General’s office and the FTC in today’s agreement, along with the attorneys general of California, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Louisiana, Maryland, North Carolina, Pennsylvania, Virginia and Washington.