Consumer watchdog group the Consumer Financial Protection Bureau (CFPB) has notified Signet Jewelers — the parent company of Zales, Kay Jewelers and Jared — that it may take future action against the company for its in-store credit practices.
Signet first received the notice in early September, but first disclosed it in an evening filing on Friday (Dec. 1). The notification, according to reports, pertains to the firm’s “credit practices, promotions and payment protection products.”
Through its retail chains, Signet is known for offering credit to consumers — particularly those with less-than-stellar credit scores. During this fiscal year, a reported 62 percent of its $3.9 billion in sales in its “sterling jewelry” business was offered on credit. To reduce its balance sheet risk, Signet sold $1 billion in prime accounts to Alliance Data Systems earlier this year.
The firm has elicited 585 complaints from consumers, according to the CFPB website. Those complaints include attempts at collection of funds not owed, abusive debt collectors and fake accounts created via identity theft. The complains, like all complaints to the CFPB, are anonymous and cannot be verified.
“It’s like they try and make you keep the rings, so all around it was game after game,” one consumer wrote in March. “I was also told by the store manager that I didn’t own them anything at all and now I’m being charged [redacted amount].”
“Store cards were opened in my name and birth date with an unknown Social Security number,” wrote another frustrated consumer in May. “[The] creditor sent cards to an address I never resided in a state I never resided.”
In its filing, Signet noted it cannot predict the timing, outcome or possible range of losses pertaining to the claim. It further said it is cooperating with the investigation, though it believes the complaints again it to be without merit.
The investigation is inopportunely timed for Signet, which reported Q3 losses following an industry-wide engagement ring sales slow down. Separately, CEO Mark Light stepped down this summer for health reasons. Signet Jewelers’ shares fell 1.52 percent in after-hours trading as the CFPB investigation news broke.