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Sterling Jewelers, Comenity Unauthorized Credit Cards Class Action

Tara Lodge took jewelry to a Kay Jewelers store in Ohio to be cleaned and inspected. She had no idea that the saleswoman, who asked for her name to update information, was putting together an application for a credit card in her name. The complaint for this class action claims that Kay’s parent company, Sterling Jewelers, Inc., along with partner Comenity Bank, has been pushing its salespeople to open credit card accounts for customers and that this is sometimes done without the customers’ knowledge.

Two classes have been proposed for this action.

  • The Nationwide Class is all persons in the US (including its territories and the District of Columbia) who received a Sterling-brand store credit card or payment protection insurance but had not given their consent.
  • The Ohio State Class is all persons in the state of Ohio who received a Sterling-brand store credit card or payment protection insurance but had not given their consent.

Why would a jewelry seller be so anxious to open credit card accounts? The complaint says.  “From 2014 through 2017, approximately 60% of Sterling’s sales were financed by consumers using Sterling’s in-house credit, generating more than $300 million in net revenue for Sterling each year.” When Comenity began managing the company’s in-house credit in 2017, the number was up to 62%.

The complaint quotes the company’s Annual 10-K for the fiscal year ending on January 30, 2016 as saying, “The lifetime value of a customer obtained through the in-house credit program is estimated to be 3.5 times that of a customer not obtained through the in-house credit program.”

Because this accounts for a substantial part of its income, Sterling considers it to be important. Unfortunately, as in the well-known Wells Fargo case, it imposed unrealistic quotas on employees. Customers were pressed to apply for credit cards as well as unauthorized insurance products to protect their purchases. 

The complaint claims that Sterling often compiled applications in customers’ names without their knowledge and that Comenity Bank processed them without checking took closely into whether the they were legitimate applications or not. 

Unfortunately, this story is not new. In 2016, the Consumer Financial Protection Bureau (CFPB) and the New York Attorney General’s Office began investigating Sterling for these kinds of practices. 

The investigation was already underway when the plaintiffs in this case, Tara Lodge and Jacqueline Desmond, separately visited the store on different days in 2018. Neither wanted or agreed to apply for a credit card. Both only found out later that applications had been submitted in their names. 

A Stipulated Final Order and Judgment has now been issued in that investigation. It requires Sterling to pay a $10 million civil penalty, but it does not include any money for the consumers who were taken advantage of. That is what this class action seeks to remedy, the complaint says. 

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Sterling Jewelers, Comenity Unauthorized Credit Cards Complaint

May 8, 2019

Tara Lodge took jewelry to a Kay Jewelers store in Ohio to be cleaned and inspected. She had no idea that the saleswoman, who asked for her name to update information, was putting together an application for a credit card in her name. The complaint for this class action claims that Kay’s parent company, Sterling Jewelers, Inc., along with partner Comenity Bank, has been pushing its salespeople to open credit card accounts for customers and that this is sometimes done without the customers’ knowledge.

sterling_jewelers_unwanted_credit_cards_compl.pdf

Case Event History

Sterling Jewelers, Comenity Unauthorized Credit Cards Complaint

May 8, 2019

Tara Lodge took jewelry to a Kay Jewelers store in Ohio to be cleaned and inspected. She had no idea that the saleswoman, who asked for her name to update information, was putting together an application for a credit card in her name. The complaint for this class action claims that Kay’s parent company, Sterling Jewelers, Inc., along with partner Comenity Bank, has been pushing its salespeople to open credit card accounts for customers and that this is sometimes done without the customers’ knowledge.

sterling_jewelers_unwanted_credit_cards_compl.pdf
Tags: Deceptive Business Practices, Opening unauthorized accounts