Friedman’s Jewelers, the nation’s third-largest chain of jewelry stores, agreed to repay $2.15 million to 19 states to settle complaints that its clerks were forcing customers to purchase credit insurance when they financed jewelry purchases, which in many cases, they neither requested nor authorized, according to several reports.

As part of the legal action, Friedman’s stores have to make all financing terms clear to consumers, including the fact that credit insurance is optional. And the company cannot extend and charge for this coverage without the consent of the consumer.

Texas attorney general Greg Abbott announced the settlement Tuesday. Texas was one of the first states to launch an investigation in December, 2004.

Abbott hailed the agreed final judgment against Friedman’s as a victory for Texas consumers who were not informed that they were buying this optional coverage. Abbott said that some who noticed the charges and questioned Friedman’s employees were falsely told that coverage was mandatory to obtain a line of credit. The cost of the coverage was based on the amount of credit being used, and many consumers had to pay in excess of $100 for the coverage in addition to the retail price of the jewelry and interest.

“It’s 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, often without their consent or knowledge,” Abbott said in a statement. “Any retailer who wants to do business in Texas must deal fairly with the public and be above-board in explaining all terms of a sale.”

Other states included in the settlement are: Alabama, Arkansas, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Mississippi, Missouri, North Carolina, Ohio, Oklahoma, South Carolina and Tennessee, The Associated Press reports.

While agreeing to the settlement, the company has denied any wrongdoing, according to media reports.

The $2.15 million figure was reported by Dallas Business Journal and widely reported. However, a spokesperson for the Abbott told the AP that the final figure will be based on the number of consumers who file complaints.

During the settlement negotiations, Friedman’s was in the process of moving its headquarters from Savannah, Ga., where the Friedman family started with one downtown store in 1920, to the Dallas suburb of Addison, Texas, the Savannah Morning News reported.

JCK