OAKLAND — California Attorney General Rob Bonta and San Diego County District Attorney, Summer Stephan, today announced a $500,000 settlement with San Diego-based jewelry store Attractive Gems Jewelers (Attractive Gems) and its two owners, resolving allegations that the company engaged in deceptive lending practices. A joint investigation by DOJ and the San Diego County District Attorney’s Office found that Attractive Gems misled consumers by falsely promoting a store credit line as a way to build credit. The company also failed to provide required credit disclosures, and used unlawful arbitration clauses in installment contracts with military service members in violation of the federal Military Lending Act. Today’s proposed settlement, pending court approval, includes $400,000 in consumer restitution, $100,000 in civil penalties, and strong injunctive terms to deter future misconduct.
“Deceiving consumers and using false advertising to sell credit products has no place in California,” said Attorney General Bonta. “Attractive Gems Jewelers lured consumers in — including military servicemembers based in Southern California — with false promises of helping to build their credit. Today's settlement provides important restitution for those harmed by Attractive Gem’s attempt to take advantage of struggling consumers, and a reminder to those offering credit products that they need to play by the rules. I thank the San Diego County District Attorney’s Office for their collaboration in this investigation and in the important effort to protect California consumers.”
From approximately 2020 to 2022, Attractive Gems marketed and sold a $10,000 store-use only credit line for a yearly fee of $149.99. Attractive Gems promoted the credit line as a way to improve one’s credit – specifically by representing that credit line accounts would be reported monthly to credit bureaus. They broadened the reach of their advertising by hiring online social media influencers to promote the credit line as a way to build credit. Attractive Gems continued to sell the credit line even after the credit bureaus informed Attractive Gems that they would no longer report its line of credit on consumer credit reports.
The investigation also found Attractive Gems failed to provide important credit disclosures required by both California and federal law. These disclosures ensure borrowers understand important information about the credit contract, including exactly how much they are borrowing, the interest rate, what their monthly payments will be, and exactly how much the credit will cost them in interest payments over the life of the contract.
Attractive Gems’ installment contracts also included an unlawful arbitration clause for military service members in violation of the federal Military Lending Act. In order to protect service members from predatory lending practices, under the Military Lending Act creditors cannot ask covered service members or covered dependents to waive their right to sue in court or to give up other legal protections when obtaining a loan.
A copy of the complaint and proposed settlement is available here and here.