California Attorney General Xavier Becerra Tuesday announced a $10.5 million partial settlement with Southland retailer Curacao, resolving multiple allegations that the chain deceived and unlawfully profited from its largely Latino customer base.
Curacao owns and operates nine department stores in Southern California and actively markets to low-income, immigrant Latino consumers. The settlement includes $10 million in debt relief for consumers who were harmed by Curacao’s alleged conduct. It also includes additional debt forgiveness for customers who are still paying Curacao for unlawful small claims judgments, plus $500,000 in civil penalties.
The settlement includes injunctive terms requiring Curacao to comply with California law and treat its customers fairly and ethically.
“Curacao claimed to be part of Southern California’s Latino community,” Becerra said. “It then proceeded to defraud low-income individuals, Spanish speakers and immigrants with little or no experience entering into long-term financing contracts. This company fleeced its own loyal customers who simply walked into its department store looking for a decent deal. Curacao will now have to pay for its bad practices and obey a court order that will make the company treat its customers fairly.”
The settlement with Adir International, the parent company of Curacao, and its owner Ron Azarkman resolves allegations that Curacao systematically violated California consumer protection laws when it lured consumers into its stores with deceptively low interest rates and out-of-stock “sale” items, refused to sell items at advertised prices, and packed customer contracts with accessories, warranties, and installation services without the customers’ knowledge or consent.
The settlement also resolves allegations that Curacao sold unlawful warranties and garnished customers’ wages after winning fraudulent default judgments against them in small claims court.
“Immigrants in Los Angeles County, particularly those whose primary language is something other than English, face significant challenges every day,” said Rafael Carbajal, director of the Los Angeles County Department of Consumer and Business Affairs. “The least they can expect is to be treated fairly and lawfully by businesses that serve and market to them in their preferred language. We are pleased that the attorney general has secured relief for consumers who need it most, and that we were able to play our part to help keep the marketplace fair for both consumers and businesses which properly follow the law.”
Becerra sued Curacao in October 2017 following an investigation carried out in partnership with the Department of Consumer and Business Affairs. The lawsuit alleged that Curacao lured in customers by advertising low prices and easy credit, then informed those consumers they could only buy at the advertised price after purchasing ancillary accessories, warranties, or installation services. In other cases, Curacao added items to payment contracts without their customers’ knowledge.
Curacao allegedly failed to inform customers about important terms in the contract before asking them to sign and, in some cases, gave customers contracts in English even though they spoke only Spanish. When customers tried to return items to the store, they were often told that Curacao’s return policy — which was not previously disclosed to them — prevented Curacao from accepting the return, or resulted in Curacao charging an undisclosed “restocking” fee. The lawsuit also alleged that Curacao harassed customers, as well as their family members and employers, with repeated debt collection calls and letters.
The settlement also requires Curacao to provide additional consumer relief to consumers affected by unlawfully obtained small claims judgments. When consumers fell behind on payments and their accounts became delinquent, Curacao went after them in small claims courts but often failed to serve their former customers with the lawsuits as required by the law. The small claims courts then imposed default judgments against the consumers, who were often unaware that they had been sued.
The settlement is a stipulated judgment that resolves part of the state’s lawsuit against Curacao. Unresolved claims related to Curacao’s allegedly illegal payment protection plans and insurance practices will be tried in Los Angeles Superior Court.