Texas Charges Friedman's Jewelry Chain Misled Consumers

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Texas Attorney General Greg Abbott has filed suit against the country's third-largest chain of jewelry stores. Abbott charges Friedman's Inc. of Savannah, Ga., 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 Abbott. "The company should have been clear that these 'side' agreements are completely optional with such purchases."

The Attorney General's investigation says 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 mid-western 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. Abbott says this coverage should have been represented as optional to the customer, not mandatory, according to the lawsuit.

The state asked 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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