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May 8, 2000
A consumer lawsuit against Friedman's Jewelers accuses the chain of illegally charging consumers for insurance when they bought jeweler on credit. Friedman's operates 560 stores in 21 states, mostly in the south.
The suit was filed in Charleston, WV, by James Dunlap and Stephanie Gibson. Each bought and financed a ring from Friedman's in 1997 and say they did not know about or consent to the purchase of several different insurance policies -- credit life, credit disability and property -- which were added to their bills.
Friedman's earlier agreed to repay about 4,000 customers in West Virginia who bought insurance without knowing it. The settlement with the state Attorney General's Office requires the company to refund up to $1.5 million to customers who purchased jewelry at stores in Beckley, Bluefield and Charleston from sales associates who were not licensed insurance agents.
The stores have agreed to stop selling insurance in West Virginia until its employees become licensed agents. They will then be required to ask customers if they want the insurance.
Besides Freidman's, headquartered in Savannah, GA, the suit names American Bankers Insurance Co. of Florida. Friedman's is controlled by investor Phillip Cohen who also controls Crescent Jewelers, a chain of 150 jewelry stores in the West.
The suit, which seeks class action status, was filed by the Charleston law firms of Bailey & Glasser and the Grubb Law Group.
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