Originally in The Fayetteville Observer

November 8, 2018

The parent company of a Fayetteville jeweler is under investigation by North Carolina Attorney General Josh Stein after New York’s attorney general filed a suit alleging it is targeting service members.

New York-based Harris Jewelry, which has a store in Cross Creek Mall, faces allegations of deceptive practices and illegal lending to finance sales to active-duty service members.

“As we allege, Harris Jewelry used service members as pawns in a predatory scheme,” said Barbara Underwood, the New York attorney general.

In a statement, the jeweler called the allegations inaccurate and “baseless.”

The lawsuit is the result of an ongoing multi-state investigation co-led by New York and Tennessee. A group of 14 states is investigating the company’s sales practices.

Stein issued a civil investigative demand last week requiring the jewelry company to produce documentation of its business practices.

“We should respect the members of our military, not trick them,” Stein said. “My office will not tolerate companies seeking to take advantage of our brave men and women in uniform. We will continue our investigation and, if necessary, take further legal action.”

The lawsuit states the New York headquarters is one of about 23 national stores “strategically located” near or on military installations to “target” active-duty service members.

The company’s website states it was founded in 1955 by Jerome L. Harris, a World War II Marine veteran.

The suit alleges the jeweler draws in service members through a “purported” charitable program known as “Operation Teddy Bear.” Once service members are in the store, they are told they can improve their credit score through “The Harris Program,” or consumer adjustment, the suit states.

Consumer adjustment is merely an alter-ego of Harris, the suit states. It alleges the company is operating as in-state lenders without appropriate licenses.

The suit alleges the amount of credit available — which is determined by Harris — is based upon the service members’ branch of service and length of time remaining on active duty.

Specifically, it alleges active-duty service members are targeted because of their likelihood to pay the debt. The Uniform Code of Military Justice requires service members to maintain financial solvency as a prerequisite for security clearances and job assignments.

The suit also questions the quality of the jewelry and alleges the company increases wholesale costs by six, seven or in some instances 10 times more, compared with industry standards of doubling or tripling the cost.

The suit alleges jewelry is advertised with “per payday” costs that prevent the customer from calculating the “true cost.”

The suit also says the business is in violation of the Military Lending Act, which does not allow creditors to impose annual interest rates greater than 36 percent.

“Harris Jewelry operates in full compliance with the laws that regulate our industry,” company representatives said. “Harris Jewelry stands behind its decades-old business model. The New York Attorney General has unfortunately reached the wrong conclusions about our business and the work we do.”

The company states its payment policies are transparent and on its website.

Harris Jewelry is also being investigated by the attorneys general in Nevada, Delaware, Georgia, Hawaii, Idaho, Illinois, Kansas, Louisiana, Maryland, Pennsylvania and Virginia.