Signet’s Credit Practices Spur Investigations

In its latest form 10-Q filed with the Securities and Exchange Commission, Signet revealed that two government agencies are conducting investigations into the company’s credit practices.

On Sept. 6, the Consumer Financial Protection Bureau (CFPB) told Signet it is considering legal action against the company, regarding alleged violations of the Consumer Financial Protection Act of 2010 and the Truth in Lending Act.

The alleged violations are related to in-store credit practices, promotions, and payment protection protocols, the company said, without getting more specific.

The jewelry chain has received a Notice and Opportunity to Respond and Advise (NORA), which gives the targeted party a chance to respond before an enforcement action proceeds.

According to the filing: “This notice stems from an inquiry that commenced in late 2016 when Signet received and responded to an initial civil investigative demand. Signet has cooperated and continues to fully cooperate with the CFPB.…Signet submitted a response to the NORA letter to the CFPB, which stated its belief that the potential claims lack merit.”

In addition, SIgnet disclosed that the New York State attorney general (NYAG) is currently investigating similar issues.

“Signet has been cooperating with the NYAG’s investigation which remains ongoing,” said the regulatory filing. “Signet continues to believe that its acts and practices relating to the matters under investigation are lawful.”

The company directed JCK to its SEC filings.

Signet’s U.S. subsidiary, Sterling Jewelers, currently has 585 complaints listed with the CFPB.

Signet is in the process of outsourcing its credit. It recently sold nearly $1 billion worth of prime credit accounts to Alliance Data Systems. It still hasn’t found a buyer for its subprime accounts, which represent approximately 45 percent of its credit book.

JCK News Director

  • Jim Adair

    correct me if I am wrong but the numbers are 10-15% prime 30-35% are sub prime and the balance is worse than that. Not the numbers in the article.

    • Rob_Bates

      The prime accounts that were just sold are 55 percent of the book. Thus the rest are sub-prime.

      • JT Curtiss

        I was sure I saw a recent article of yours that quoted figures of 95% of the credit book that was sold was prime and signet retained 5% in subprime…I quoted those figures in your new “secret sauce” piece but now can’t find the original 95/5 item…did I imagine it?

        • Rob_Bates

          The 55 prime/45 “the rest” figures are as far as I know, correct.

  • Randy

    That’s how Signet inflated it’s value…by deceiving it’s investors by showing steady growth stemming from subprime that it is 3rd party, the market share will start to balance out…the mall chain cannot continually compete against e-tailers whose consumers are more savvy when it comes to their spending power.

  • lawrencecollins

    smell smoke soon a big fire. Then the house comes down.

  • lawrencecollins