The U.S. Consumer Financial Protection Bureau (CFPB) and New York’s attorney general, Letitia James, filed a lawsuit against Sterling Jewelers Inc, accusing the wholly owned jewelry subsidiary of Signet Jewelers Ltd, of improper credit financing practices. Sterling was accused of submitting credit applications and causing credit cards to be issued without the knowledge or consent of its customers, misrepresenting credit financing terms and conditions in presenting these to customers, and enrolling consumers in payment protection insurance without their knowledge or consent.
The CFPBs’ and the state’s investigations found that Sterling violated the Consumer Financial Protection Act of 2010. New York and the federal agency also found that Sterling violated several provisions of the Truth in Lending Act. Under the settlement, Sterling will pay a $10 million civil penalties to the CFPB and a $1 million civil penalties to the State of New York. Sterling has also agreed to injunctive relief in order to prevent future violations. Copies of the complaint and the proposed consent order filed in federal district court in the Southern District of New York are available publicly.
Sterling is a nationwide company headquartered in Akron, Ohio. It operates over 1,500 jewelry stores under several names, including Kay Jewelers, Jared The Galleria of Jewelry, JB Robinson Jewelers, Marks & Morgan Jewelers, Belden Jewelers, Goodman Jewelers, LeRoy’s Jewelers, Osterman Jewelers, Rogers Jewelers, Shaw’s Jewelers, and Weisfield Jewelers.
Signet Jewelers Ltd. Is also facing a securities-fraud lawsuit filed by shareholders alleging the company misled them about the health of its credit portfolio and allegations of sexual discrimination. U.S. District Judge Colleen McMahon, appointed by former president Bill Clinton, denied jeweler’s request to dismiss this lawsuit, which was originally filed by the Public Employees Retirement System of Mississippi.
Signet argued that statements about the condition and management of its credit portfolio were nothing more than “puffery or inactionable statements of opinion.” The judge rejected the claim, stating that many of the comments came in direct response to questions about the portfolio and were “purported statements about the health of the business.” The complaint was filed in Manhattan federal court.
The CFPB made a number of controversial changes and announcements under direction of its former acting director, Mick Mulvaney. Mulvaney had been a long-time critic of the agency while he was a South Carolina Congressman. Under his directorship, he closed the agency’s student lending office and fair lending division and fired all members of its advisory board. He even went as far as to attempt to change the agency’s name and acronym to “BCFP” instead of “CFPB” and displayed a sign with the new name outside the bureau’s offices.
However, in late 2018, Kathy Kraninger, was confirmed as permanent director of the CFPB and made reverting the agency’s name back to what it was previously one of her first priorities.
“I care much more about what we do than what we are called,” Kraninger said in an email to CFPB employees regarding the bureau’s logo. She announced that she had “officially halted all ongoing efforts to make changes to existing products and materials related to the name correction initiative.”
It seems the bureau’s recent collaboration with New York’s AG to ensure Sterling is held accountable for shady financing practices is another step in the right direction toward reinstating some of the CFPB’s lost credibility amongst consumers.