Florida and Tennessee sue Friedman’s, 19 states may join the litigation

The states of Florida and Tennessee have joined Texas in filing lawsuits against Friedman’s Inc. for using deceptive tactics in the way the jeweler charged customer for insurance.

On Wednesday, Florida sued the troubled jewelry retailer for “duping” customers into paying for life, property, and other insurance while they thought they were insuring their financing of jewelry purchases.

On Monday, the state of Tennessee filed a lawsuit against the Savannah, Ga.-based retailer for similar alleged deceptive insurance practices. Also on Monday, as reported on the JCK Web site, Texas filed a consumer-fraud lawsuit against the retailer.

Florida Attorney General Charlie Crist said some 19 states are expected to join the litigation. Crist estimates that Friedman’s allegedly sold $46.7 million of the insurance in 19 states, but failed to adequately disclose the costs to customers.

In response to the allegations, Friedman’s said in a statement that it does not condone any improper practices. “The company believes that the transactions challenged primarily arose years ago and stated that the company has in place measures designed to monitor and assure compliance with company policy concerning credit insurance sales practices.”

According to the complaint in Florida, between 1998 and 2002 Friedman’s added charges to retail contracts for life, credit disability, and property insurance without informing customers or seeking their consenting signatures.

In Florida, where the Savannah, Georgia-based retailer has 56 of its approximate 650 U.S. stores, the suit estimates Friedman’s sold $2.265 million of the insurance. If found to have engaged in deceptive practices, the company may have to pay back customers in full and could face a penalty of up to $1 million.

“This wrongful conduct ranged from duping consumers into purchasing products they did not ask for to charging them for something that may have had no value,” Crist said in a statement.

The lawsuit filed by the Tennessee Attorney’s General office alleges that Friedman’s violated the Tennessee Consumer Protection Act by charging customers for credit life, credit disability, and property insurance without their knowledge and consent. The state alleges Friedman’s had a practice of financing consumers’ purchases and adding charges for insurance without telling customers these charges were being added to the total cost of the contract. Many consumers were unaware the insurance charges had been added to their contract, the suit charges. Some consumers who asked about the additional charges state that Friedman’s representatives told them the insurance was required and could not be removed.

“We can’t allow companies to misrepresent or add terms in consumer transactions without telling them,” Tennessee Attorney General Paul G. Summers, said in a statement.

The state is asking the court to prevent Friedman’s from engaging in the alleged unlawful conduct in the future, to provide restitution to harmed consumers, for fines, and for other relief.