Fla. Suit Alleges Ga. Jewelry Chain Failed to Disclose Insurance Costs

December 23, 2004

Florida is suing a Savannah-based retail jewelry chain, alleging the company sold millions of dollars worth of insurance on jewelry items but failed to adequately disclose the costs to consumers.

Friedman’s Inc. (OTCBB: FRDM.PK), which has 56 stores in Florida among its 650 stores nationwide, allegedly sold $46.7 million worth of the insurance in 19 states. The insurance was designed for customers who finance the purchase of jewelry.

Florida Attorney General Charlie Crist estimates the company collected more than $2.3 million in Florida. According to the complaint, between 1998 and 2002, Friedman’s added charges to retail contracts for life, credit disability and property insurance. Friedman’s allegedly collected approximately $46.7 million from the 19 states combined.

The company allegedly added the insurance amount to the total price of retail installment contracts without obtaining consumers’ signatures to authorize the transactions, the attorney general’s office states.

“This wrongful conduct ranged from duping consumers into purchasing products they did not ask for to charging them for something that may have had no value,” Crist said.

Friedman’s is charged with violating Florida’s Deceptive and Unfair Trade Practices Act. The lawsuit seeks full restitution to consumers and penalties amounting to between $250,000 and $1 million in Florida, as well as an injunction prohibiting the company from engaging in deceptive and unfair business practices.

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