On Nov. 19, Harris Jewelry filed a motion to dismiss a well-publicized complaint against it from the New York attorney general’s office.
The original complaint, filed in October in New York State Supreme Court by the office of Attorney General Barbara Underwood, charged the 21-store chain with misleading and overcharging members of the active-duty military, its main consumer base. Its primary allegation is that Harris’ advertised “per-payday” prices—as well as advertised finance rates from affiliate Consumer Adjustment Corp.—do not accurately convey the price or interest rates most customers pay.
“When accounting for the excess purchase price, protection plans, taxes, shipping and handling fees, teddy bears, and other miscellaneous items—all of which are considered part of the principal price on top of which the stated interest is added—the actual effective interest rate is unconsciously higher,” sometimes as high as 300 percent, according to the attorney general’s complaint.
The Harris Jewelry response calls this concept of “hidden interest” a “highly dubious legal theory…[that] is not supported by law or facts or economics.
“Any retail markup is a portion of the principal in a consumer credit transaction, and is not a component of interest,” it argues. “Similarly, sales taxes, shipping and handling fees, and the purchase prices of other products also do not comprise interest.”
It notes that “Harris customers pay the same retail price for jewelry regardless of whether these customers finance their purchase” or buy it outright.
And while the complaint calls Harris’ prices grossly inflated, the motion to dismiss counters that the attorney general has no authority to regulate the retail prices that Harris charges for jewelry.
“Harris maintains that its prices are reasonable and consistent with industry standards,” it adds.
It also takes issue with the complaint’s characterization of its relationship with Operation Troop Aid, its former charity partner for Operation Teddy Bear. Operation Troop Aid shut down earlier this year due to alleged violations of commercial co-venture laws.
“The [attorney general] never actually alleges that the Defendants did not give the money raised from Operation Teddy Bear to Operation Troop Aid (nor can it),” says the Harris motion, adding it now has a new charity partner.
The motion to dismiss also disputes the inclusion of one defendant, Consumer Growth Partners, arguing the firm “has provided advisory services to Harris but has no financial stake in [it].”
It also complains that the attorney general’s office breached a confidentiality agreement with regard to information the retailer provided in response to subpoenas.
Harris has previously called the allegations against it “inaccurate and baseless” and said it “stands behind its decades-old business model.”
At press time, there had been no response to the motion to dismiss.
(Image courtesy of Harris Jewelry)