FTC, state AGs order says retailer used illegal tactics on servicemembers

Federal Issues FTC Servicemembers Consumer Finance Enforcement MLA TILA

On July 20, the FTC and 18 state attorneys general announced a proposed order against a national jewelry retailer (defendant) for allegedly using illegal financing and sales practices on service members and their families. In the complaint, the FTC alleged that the defendants violated the TILA, Holder Rule, and EFTA, among other things, by: (i) making false or unsubstantiated claims that financing jewelry purchases through the company would result in higher credit scores; (ii) misrepresenting that the protection plan was required to finance purchases; and (iii) failing to provide clear written disclosures and meet authorization requirements for contracts. The complaint also alleged that the defendant violated the Military Lending Act (MLA), the FTC’s first action under this Act, because, by failing to “provide disclosures in accord with TILA, including the Itemization of the Amount Financed, they also do not provide all disclosures required by the MLA.” The proposed order requires that the defendants are, among other things: (i) prohibited from making misrepresentations; (ii) prohibited from making unsubstantiated claims; (ii) banned from the marketing or sale of ancillary products or services; and (iii) banned from transferring retail installment contracts to third parties. The order also requires the defendant to refund approximately $10.9 million for purchased protection plans, and provide refunds for overpayments.