States agree to shut down jewelry store for predatory practices used on soldiers

New York State Attorney General Letitia James attends a briefing on July 13, 2022 in Manhattan, New York. (Luiz C. Ribeiro/TNS)

New York, FTC, 17 others

WATERTOWN, NY (Tribune News Service) – “Don’t feed the bear” is what soldiers of the 10th Mountain Division were told when they began their missions at Fort Drum. It’s a warning about a marketing tactic used by a chain of jewelry stores that had branches across the country, including one here in Watertown, that has decimated the financial stability of thousands of soldiers.

During a press conference at the Dulles State Office Building in Watertown on Wednesday, State Attorney General Letitia A. James, her colleagues from the local branch of the Attorney General’s Office, a former financial education teacher from Fort Drum and a local veterans advocate detailed how Harris Jewels defrauded the military with unfair, illegal, and deceptive finance programs presented as credit-enhancing tools.

The company, based in Ronkonkoma, Suffolk County, has been sued by the New York Attorney General and several other states over its practices, and on Wednesday the attorney general announced they had reached an agreement, not yet approved, to recover more than $34.2 million for more than 46,000 soldiers and veterans targeted by Harris’ scheme.

“It all started with an innocent teddy bear,” Ms James said.

Harris staff advertised with teddy bears, dressed in fatigues, outside storefronts in towns near military installations. A Harris location was open from 2014 until April 2021 in the Salmon Run shopping center in Watertown, when it closed all storefronts due to the pandemic. The company continued to operate online until December 2021, when it stopped running its funding program under an agreement with the Attorney General. The attorney general’s investigation into the stores began in 2017, with the first prosecutions filed in 2018.

Harris salespeople lured the military into the store, promising the entire company was dedicated to meeting the needs of men and women in uniform. With Operation Teddybear, service members were told that some, if not all, of the proceeds of their purchase would go to a military-affiliated charity that sends care packages to deployed troops.

“There was never a written contract between Harris and this charity,” Ms James said. “Operation Teddybear was a marketing ploy to get the military through their doors, and once the military was lured with the teddy bears, employees were instructed to inform them of the benefits of their fundraising program. , called the Harris Program.”

In advertisements, literature, and in-store displays, the Harris program was presented as a tool to help soldiers improve their credit rating or make major purchases. They were given a line of credit and an agreement to pay a certain amount of money per month, or by paycheck, which would eventually come back to them.

Service members who enrolled in the program were informed that they could select Harris jewelry as a gift with the program.

In reality, Harris Jewelry advanced soldiers’ lines of credit, with amounts and interest rates based solely on the branch of the military, length of enlistment, and the type of jewelry they chose. The jewelry “gift” was actually a purchase, made on a line of credit issued by Harris. This line of credit was grossly unfair, with interest rates reaching 15%, payments over the agreed amount, and additional costs for added “gift” jewelry. Customers didn’t even receive proper documentation for their agreements.

On top of that, the jewelry the soldiers actually bought was extremely expensive, with some items in stores costing over 10 times more than wholesale prices. The pieces were of poor quality, with mounts that broke easily, often leaving soldiers paying hundreds of dollars for long-broken jewelry.

“Harris Jewelry’s business practices would only be described as sheer deception,” she said. “Fraud. And today they are paying the price.

The New York portion of this case and the investigation of its local impact was handled by the Watertown Regional Attorney General’s Office, led by Assistant Attorney General in Charge Deanna R. Nelson and Assistant Attorney General Julia Toce. The office was assisted by Investigator Chad Shelmindine, under the supervision of Deputy Attorney General Jill Faber of the Regional Affairs Division.

With the backing of the Federal Trade Commission, New York and 17 other states are suing Harris Jewelry over its practices, with the latest development being a final order from the FTC requiring the company to cease its practices. The order will become law when approved by a federal district court judge, which is expected to happen soon.

Under the agreement, Harris Jewelry will have to stop collecting the more than $21 million in unpaid debts they already have on the books for 13,400 troops under the Harris program, and return more than $13 million. to the 46,000 soldiers who completed the payment program. . Harris Jewelry’s website says the company has already begun this process, with a message that the Harris program, also known as CACUSA, is no longer accepting payments, canceling all existing balances, and requesting that the three Credit bureaus remove all negative ratings from Harris Program consumer reports.

In New York, 443 service members will have approximately $750,000 in debt forgiven and 1,692 service members will be reimbursed approximately $480,000 in total.

The company will also be required to fully dissolve all of its business entities and pay $1 million in total to the 18 states in the agreement. New York’s portion of the money, $150,000, will go to Jefferson County, which in turn will donate the money to the Joseph P. Dwyer Veterans’ Peer Support Center, specifically to help educate veterans. fighters and soldiers on financial literacy and to help prevent other companies from taking advantage of soldiers like this again.

Tim Crytser, veteran outreach coordinator at the Peer Support Center, said he was honored to receive the $150,000 investment. He said he has seen many veterans in the area who have faced similar predatory lending practices, and it becomes a major burden for those people.

“Once the debt is there, everything else starts to snowball, their whole life, their car, their family, their house,” he said. “It starts with the bad lousy diamond, and it spirals down, and what they usually say is they never saw it coming. Well, I guarantee you they will see it coming. now.

John Harrington, a former financial readiness counselor at Fort Drum in the late 2000s and early 2010s, said he frequently saw credit programs targeting soldiers and said the problem was far bigger than Harris. Jewelry. Another company that once had a storefront in the Salmon Run mall, SmartBuy, bought cheap laptops from nearby retailers like Walmart and resold them to soldiers in Watertown at a heavily inflated rate. All of Watertown SmartBuy’s loans were funded by unlicensed foreign companies, and the company was eventually dissolved.

“They were one of many different businesses in the area, furniture stores, payday lenders, short-term lenders,” he said. “I think of the military trying to buy cars in this area. They almost have to go to Syracuse to get a fair price on a car because all the dealerships in the area are trying to come after them.

Ms. James said her office and local branches of the Attorney General’s office like Watertown will continue to fight to protect soldiers and not allow such predatory scams to target New Yorkers again, with the help regional offices and people like Ms. Nelson and Ms. Toce.

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