Texas AG Sues Nation’s Third-largest Jewelry Chain, Alleging Consumer Insurance Deceptions

December 20, 2004

Texas Attorney General Greg Abbott announced his office has sued Friedman’s Inc. of Savannah, Ga., the nation’s third-largest jewelry chain, alleging the company misled its customers about the level of “required” insurance coverage when applying for installment credit on purchases.

“The company represents itself as a long-term, reliable friend of the customer, yet it went to great lengths to lure unwitting customers into misleading insurance contracts as part of jewelry purchases on credit,” said Attorney General Abbott. “The company should have been clear that these ‘side’ agreements are completely optional with such purchases.”

The AG’s investigation alleges the company ran afoul of the Texas Deceptive Trade Practices Act by pressuring lower-income customers into signing a “statement of insurance” while getting approved for purchases on credit. Such optional “credit” insurance protects the loan if the consumer misses payments or defaults. Company employees neglected to disclose the full nature, extent and expense of the coverage, and some customers were billed for the full credit insurance.

Friedman’s, which is incorporated in Delaware, touts itself as a “trusted neighborhood jeweler” since 1920, has operated 650 retail jewelry outlets in 22 southeastern and midwestern states, including 65 stores in Texas. The company offers multiple forms of credit on jewelry purchases, including the store’s own “Advantage Credit” program—a card that triggers the company’s retail installment credit contract with the customer.

It is within this line of credit that the company engaged consumers in the scheme to buy credit insurance, which, often unbeknownst to buyers, can include property, life and disability insurance. This coverage should have been represented as optional to the customer, not mandatory, according to the lawsuit. Consumers who believe they signed a contract for credit insurance with Friedman’s without the company giving the proper disclosures may file a complaint with the Attorney General by calling toll-free (800) 252-8011, or by going online to the agency’s Consumer Protection Web site at www.oag.state.tx.us.

The Attorney General requests the court to order civil penalties of up to $20,000 per violation of the Deceptive Trade Practices Act, restitution to harmed consumers and attorneys’ fees.

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