Minnesota Commissioner Takes Action Against Retailers

Minnesota Commerce Commissioner Jim Bernstein announced enforcement action against two retailers engaged in the sale of credit insurance in Minnesota.

The Zale Corporation, Irving, Texas with approximately 20 stores in Minnesota, has allegedly violated numerous Minnesota insurance laws. The 195 count Statement of Charges includes allegations involving the sale of credit life and credit disability insurance policies to Minnesota consumers.

Allegations against Zale’s include:

Selling credit insurance policies to Zale’s customers who were unaware they had purchased a policy. Out of 26 customers interviewed by the Department, Zales and its affiliates allegedly enrolled at least 23 customers for credit insurance who were not aware of the significance or consequences of their signature on the credit insurance application in violation of Minnesota insurance law.

Misleading the purchasers of these insurance products by not telling them about coverage limitations, exclusions, or if they qualify for coverage under terms of the policy.

Using unapproved policy applications that lacked the proper disclosure. Of 59 policy applications reviewed by the Department, representing 59 separate transactions, none of them contained the required disclosures and information.

Failing to provide copies of the policies to insureds. One Zale’s store ran out of certificates and for several weeks did not restock them or otherwise make provisions for the certificates to be delivered within 30 days to the applicants that did not receive them. The practice of failing to provide insurance certificates to customers continued for at least two years.

Illegally compensating store and regional managers with bonuses if monthly insurance sales goals were met. In at least one instance, the improper bonus was paid to a single manager for as long as 18 consecutive months. Zale’s has not agreed to a settlement with the Department. An administrative law judge will now hear the matter before Commissioner Bernstein makes a final ruling on penalties.

Bernstein also announced a settlement with Circuit City of Richmond, VA. Circuit City – while not admitting or denying any guilt – will pay a civil penalty of $335,000 stemming from the sale of credit insurance at their 10 Minnesota stores.

In addition, Circuit City has agreed to stop selling credit insurance in Minnesota until procedures are established to prevent obtaining signatures by false pretenses or through misrepresentation. Circuit City will also offer premium refunds to customers that have purchased credit insurance in the last two years.

Topics Minnesota