Sterling Jewelers Inc, the division of Signet Jewelers that houses Kay Jewelers and Jared the Galleria of Jewelry, has agreed to pay $10 million to the U.S. Consumer Financial Protection Bureau and an additional $1 million to the New York Attorney General’s Office to settle legal action over alleged miss-selling of branded credit cards to customers.
The New York authorities accused Sterling Jewelers of encouraging its staff to sign up shoppers for branded credit cards and other financing products without their knowledge or consent, according to legal filings.
It emerged this week in settlement documents that Sterling allegedly netted more than $300 million in 2017 from its financing and credit card product.
“Many of Sterling’s store managers and district managers encouraged deceptive tactics to induce consumers to apply for a credit card, and many turned a blind eye to such conduct,” the complaint says.
It continues that consumers were misled about interest rates or other financing terms, and some were sold payment-protection insurance along with the financing that they didn’t want.
“By tricking consumers into enrolling in store credits cards, Sterling Jewelers betrayed customers’ trust and violated the law,” New York Attorney General Letitia James said. “This settlement holds the company accountable for its misconduct and ensures that no more consumers are deceived.”
The case has echoes of payment protection insurance miss-selling in the United Kingdom, which has been one of the biggest financial scandals of the past decade and seen the five biggest UK banks compensate customers to the tune of £36 billion over six years.
Despite agreeing to the settlement, Sterling Jewelers denies all allegations. David Bouffard, vice-president of corporate affairs for parent organization Signet Jewelers, said that the company cooperated with the investigations, denied the allegations, and only settled to avoid the expense of litigation.
“We have used this opportunity to internally reaffirm the transparency and fairness of our credit-related policies and we look forward to continuing to provide our customers with access to suitable credit options,” he said.
According to legal news site Law360, the settlement still needs signing off by a judge, and Sterling will need to be specific about how it intends to comply with the terms of the agreement.