A now-defunct national jewelry company has agreed to pay millions in refunds to settle allegations it cheated military families across the country with illegal financing and sales practices for overpriced jewelry, in a settlement announced by the Federal Trade Commission and 18 state attorneys general.

Two of its stores were located on military bases: Fort Bliss, Texas, and Fort Benning, Georgia.

The company, Harris Originals, based in Hauppage, New York, has agreed to pay $13 million in refunds to 46,204 service members who paid for lifetime protection plans and to stop collecting $21 million in outstanding debt owed by 13,426 service members.

The settlement agreement was filed Wednesday in U.S. District Court for the Eastern District of New York and is pending approval by the court.

In addition, Harris Originals, also known as Harris Jewelry, must provide refunds for overpayments and contact the credit reporting agencies to request removal of negative credit entries. The company must complete the shutdown of its operations once the requirements of the agreement are met.

Service members and veterans who entered into a financing loan starting in January 2014 will be eligible for restitution to the extent they paid for these lifetime protection plans. They’ll receive an email and letter in the mail notifying them of their eligibility; then those customers must apply for their refund.

The 18-state settlement agreement was co-led by the Federal Trade Commission and the New York Attorney General’s office. Each of the company’s 19 retail stores around the country is separately incorporated as a wholly owned subsidiary of Harris Originals of New York.

Harris Jewelry set up 19 retail stores around the country, including those in exchange malls at Fort Bliss, Texas, and Fort Benning, Georgia, according to court documents.

The other stores were located near military bases in shopping malls with many military customers or at kiosks in airports serving military bases, according to court documents.

The company sold military-themed gifts, jewelry and watches, and nearly all of its sales were made on credit, financed by the company. The stores were located near bases of all branches of service, from Hawaii to San Diego, to San Antonio, to Jacksonville, North Carolina.

The company closed its stores in April 2021, because of the COVID-19 pandemic. The company will not reopen the stores, Harris Jewelry officials said, in a statement provided to Military Times.

Harris Jewelry neither admits nor denies any of the allegations, according to the proposed settlement agreement. The settlement “resolves these matters in the best interest of all its stakeholders,” company officials stated.

The statement noted its “proud 60-plus-year history serving active duty military personnel, retirees, reservists, National Guard and their families.”

Service members bought jewelry ranging in price from $1,000 to $3,300, according to court documents.

“The company used deceptive marketing tactics to lure active-duty service members to their financing program, falsely claiming that investing in this program would improve service members’ credit scores,” according to the New York Attorney General’s Office. “Instead, service members 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.”

Authorities also allege the company misrepresented that the protection plan was required to finance purchases, failed to provide written disclosures failed to provide oral disclosures at the time of sale as required by the Military Lending Act.

The store at Fort Bliss, Texas, operated from June 2015 to April 2021. The Fort Benning, Georgia, store operated from May 2017 to April 2021, said Julie Mitchell, a spokeswoman for the Army & Air Force Exchange Service. The jewelry stores operated as concessionaires.

When considering whether a company can establish concession operations with AAFES, officials consider solvency of the business, customer demand, service levels and alignment with Department of Defense contracting and regulations and U.S. law, Mitchell said.

The Harris Jewelry website states it will notify customers that they may be eligible for refunds of the lifetime protection plans — and that the company no longer has to honor those plans.

The site also states that the company isn’t accepting any more payments on loans and that all remaining balances have been written off. They’ve also requested that the three credit bureaus remove all previously reported negative credit entries.

All this is required of the company as part of the settlement agreement.

According to court documents, Harris Jewelry violated federal laws, including the Military Lending Act, “by targeting active duty service members at retail stores across the country and making misleading, false, and unsubstantiated representations that defendants’ retail installment contracts financing the purchase of military-themed gifts, jewelry and watches would improve service members’ credit history.”

“Defendants target their advertising, sales pitch, merchandise, pricing and financing at active duty service members,” alleged the complaint.

The central theme of Harris Jewelry’s sales pitch “is that purchasing from them on credit will, regardless of service members’ credit history or subsequent borrowing or payment activity, improve service members’ credit scores, setting service members up to save thousands of dollars on car loans and obtain military promotions,” the complaint alleges. “Defendants’ representations, however, are misleading, false or unsubstantiated.”

Authorities also alleged that the company used charity pleas as a marketing tactic “to dupe service members into high-priced, deceptive in-house contracts for vastly overpriced jewelry,” according to the New York attorney general’s announcement.

Troops were given varying and conflicting information the amount of money that would be donated to charity.

The states involved in the legal action were California, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansa, Louisiana, Maryland, Nevada, New York, North Carolina, Pennsylvania, Virginia and Washington.

AAFES was not involved in any of the investigations, Mitchell said. However, the Federal Trade Commission announcement stated the FTC and the states “are grateful for the Department of Defense’s coordination and support on this matter.”

The Department of Defense “appreciates the work of the FTC and other partners in protecting service members and their families from such harmful practices and in securing appropriate remedies,” Gilbert R. Cisneros, DoD under secretary of defense for personnel and readiness, said in a statement provided to the FTC. “We believe these efforts contribute to service members’ overall financial well-being and readiness.”

Customers with questions, or those who believe they are eligible for restitution but haven’t been notified, can contact the New York State Attorney General’s Office at (315) 523-6080.

Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.

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