Friedman's to pay $2.1 million to settle lawsuits

Savannah, Ga.—Friedman's Jewelers reached an agreement with the attorneys general of 18 states to pay $2.1 million to settle lawsuits alleging the retail chain misled customers into buying insurance.

Under the resolution, announced Oct. 17, the 420-store chain did not admit wrongdoing, but agreed to change its business practices.

The attorneys general sued the chain in 2004, claiming Friedman's routinely sold its low-income customers credit, property and disability insurance when they applied for credit, even though customers did not ask for or approve the coverage.

"It is patently unfair that consumers who bought jewelry to commemorate an important event or as a special gift were illegally steered into costly insurance coverage for those items," says Texas Attorney General Greg Abbott.

The states alleged that some customers did not understand they purchased the coverage or were charged for it without an authorizing signature, while employees falsely told others that the coverage was mandatory in order to receive credit.

Under the settlement, Friedman's will have to clarify credit and insurance agreements, provide written warranties, advise all customers that insurance is optional and designate an executive to oversee consumer-protection law compliance. Friedman's attorney, George Panagakis, did not return phone calls.

—Beth Braverman