AG investigation ends jewelry pyramid scheme in Washington state

SEATTLE — Utah-based jewelry company Paparazzi will pay $1.9 million and reform its business practices in Washington state following an Attorney General’s Office investigation into the company’s pyramid scheme. Attorney General Nick Brown will send 7,100 Washingtonians who sold jewelry for the company checks of an average of $180 in the near future.

“Our investigation showed Washingtonians were clearly harmed by Paparazzi,” Brown said. “Advertising too-good-to-be-true returns on investments is one of the ways companies and individuals try to deceive Washingtonians.”

The payment is part of a resolution Paparazzi signed to avoid a lawsuit over violations of the state Consumer Protection Act and Antipyramid Promotional Scheme Act. Washingtonians who sold Paparazzi’s products can return to the company any unsold merchandise that they purchased after January 2017 for a full refund.

The binding resolution also requires the company to be more transparent if it wants to keep operating in Washington state. It creates a nationwide claims process for refunds for anyone who bought Paparazzi jewelry that contains the heavy metals lead and nickel. Paparazzi advertised certain products — including those marketed toward children and youth — as free from both heavy metals. Paparazzi’s own testing revealed that some of its products contained lead and nickel.

The resolution also reforms how Paparazzi can advertise its sales program, to include fully disclosing the income sales consultants would likely receive from its sales programs.

The Consumer Protection Division is largely funded through money recovered from businesses who have violated Washington’s Consumer Protection Act and similar laws, not by taxpayers. Specifically, a portion of Consumer Protection recoveries go into the Attorney General's Civil Justice Operating Fund, which supports the Consumer Protection, Antitrust, Wing Luke Civil Rights, and Environmental Protection divisions. It also funds Medicaid Fraud Control and the Complex Litigation divisions.

Here are some recent key consumer protection victories:

• $1.3 billion in recoveries dedicated to combating the opioid epidemic at the state and local level.
• Blocking the Kroger and Albertson’s anticompetitive grocery store merger.
• Up to $40.6 million will be distributed to Washingtonians who overpaid for chicken and tuna products that were part of a price-fixing conspiracy.
• A nationwide agreement requiring Dollar Tree to monitor its testing labs to ensure they follow appropriate testing methods for lead and cadmium that are audited and verified through independent experts.
• Over $43 million in direct refunds and debt forgiveness to student loan borrowers.
• More than $158 million in debt relief to patients who Washington hospitals failed to screen for charity care.
• Our Consumer Protection Division has  successfully challenged consumer “non-disclosure” agreements to make sure online reviews are honest and returned funds to consumers who signed illegal contracts.
• The Manufactured Housing Unit, recoups millions of dollars for tenants subjected to illegal rent hikes and other misconduct under the Manufactured Housing Landlord Tenant Act.
• The Wing Luke Civil Rights Division addresses discrimination in housing, employment, insurance, credit, and in government services and businesses open to the public. Recent wins illustrating the breadth of that work include wins against Allianz ($1.5 million, insurance discrimination), Greenridge Farming ($470,000, farmworker sexual harassment and retaliation) and Operation Veterans Assistance & Humanitarian Aid (more than $2.15 million, sexual harassment and retaliation at a chain of thrift stores).

Our Consumer Resource Center, which answers between 25,000-30,000 calls annually, returns over $10 million to consumers every year via its informal dispute resolution efforts. Assistant attorneys general also take calls and complaints throughout the year that result in additional consumer protection actions.

Assistant Attorneys General Ben Brysacz, Joe Kanada; Paralegals Joseph Drouin, Luis Oida and Heather Zamudio handled the case for Washington. Former Assistant Attorneys General Susana Croke, Kevin Eggers and Camille McDorman also handled the case before leaving the Attorney General’s Office.

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Washington’s Attorney General serves the people and the state of Washington. As the state’s largest law firm, the Attorney General’s Office provides legal representation to every state agency, board, and commission in Washington. Additionally, the Office serves the people directly by enforcing consumer protection, civil rights, and environmental protection laws. The Office also prosecutes elder abuse, Medicaid fraud, and handles sexually violent predator cases in 38 of Washington’s 39 counties. Visit www.atg.wa.gov to learn more.

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