Photo credit: M.O. Stevens
Sterling Jewelers Inc. has agreed to pay $11 million after investigations by the New York Attorney General’s Office and the Consumer Financial Protection Bureau found that Sterling signed consumers up for store credit cards without the consumers’ knowledge or consent. Sterling also enrolled consumers in a credit insurance product without consumers’ knowledge or consent and misrepresented the terms of the store cards. Under the settlement, Sterling will pay $11 million in penalties.
“By tricking consumers into enrolling in-store credits cards, Sterling Jewelers betrayed customers’ trust and violated the law,” said New York Attorney General Letitia James. “This settlement holds the company accountable for its misconduct and ensures that no more consumers are deceived.”
Sterling, doing business as Kay Jewelers, Jared The Galleria of Jewelry, and other brands, is based in Ohio and operates about 1,500 jewelry stores throughout the United States.
Sterling offers a store credit card that can be used only at Sterling stores. Sterling imposed credit card enrollment quotas on employees and based their performance reviews and pay on the quotas, creating intense pressure on employees to enroll consumers in store cards, James said.
Sterling employees used a variety of tactics to deceive consumers into enrolling in-store credit cards, according to the investigations. In some cases, employees got consumers to provide personal information by pretending to enroll consumers in a “rewards program” or discount program. Actually, sales representatives used personal information to complete and submit credit card applications. Consumers often didn’t find out that they had applied for a card until they noticed an unexplained inquiry on their credit report or received the card in the mail.
In addition, when consumers knew they were applying for credit, Sterling employees misrepresented the terms of the store credit cards. Sterling employees told consumers that they were being enrolled in a “no interest” promotion when they actually were signed up for a plan that included monthly fees.
Sterling also enrolled consumers in credit insurance offered in connection with the store credit cards without consumers’ knowledge or consent. In many cases, consumers didn’t find out that they were enrolled in credit insurance until they noticed fees for it on billing statements.
