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When A Wife Charges Jewelry To Her Family’s Store Account Prior To A Divorce, How Should The Store Owner Handle It?

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JACK AND NORA Deeds had been clients of Main Street Jewelers for over 30 years, ever since they bought Nora’s engagement ring there shortly after moving to Dalton, a small town in the Deep South. Main Street was a traditional, full-service downtown store that had been owned and operated by the Singleton family for several generations. The Singletons enjoyed a wonderful reputation for quality and service, and many townspeople felt that they truly embodied the “Old South” traditions and values that made the town of Dalton a great place to live.

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at [email protected]

In fact, business at Main Street Jewelers was a snapshot of an earlier time — a cornerstone of the store’s unique brand and regional reputation. Wall cases were beautifully displayed with traditional tabletop and giftware items. Main Street sales associates paid as much attention to their bridal registry as they did to things like gem scopes and diamond warranties. Despite the store’s $3 million in annual sales volume, sales slips were still hand written, with data entered into the POS system “behind the scenes.” In addition to offering financing through several major companies, the Singletons still carried a number of in-house accounts, often extending credit with a handshake and a promise, based on family relationships that started with parents and grandparents.

Jack Deeds was a regular visitor to Main Street Jewelers, as his office was located right up the street from the store. Between watch batteries, minor repairs, downtown committee business and the usual birthday and anniversary gifts, Dan Singleton could count on seeing Jack in the store at least once each month. It did strike Dan as a bit odd one day in early May when Nora came into the store and he remembered that he hadn’t seen Jack since the last Downtown Committee meeting back in February. As one of his top sales associates took care of Nora, Dan chalked Jack’s absence up to his busy schedule, remembering that the bank where Jack was a vice-president was in the process of being acquired by a larger national operation.

Like most Dalton women who shopped at Main Street Jewelers, Nora Deeds was as likely to visit the store herself as she was with her husband. She too was a regular, relying on Main Street as the solution for many of her gift-giving needs. On this particular visit, though, Nora was very much interested in something for herself. She’d had her eye on a new Rolex watch since before Christmas, and had finally decided it was time to make it her own.

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The Main Street sales associate provided the typically extraordinary service Nora had come to expect in the store, explaining all the features that made the watch a perfect choice. The bracelet was shortened and the paperwork processed. As she had so many times in the past, Nora signed the sales slip and charged the watch to the Deeds’ account.

About three weeks later, Jack came into the store to have the strap replaced on his own watch. In the course of friendly conversation, Dan mentioned that he hadn’t seen Jack in awhile, and asked how Nora was handling his working so hard through the bank merger. Jack turned suddenly somber when he told Dan that he and Nora had actually separated several months ago and were in the middle of a rather nasty divorce. Nora had, in fact, very recently left Dalton and moved to California. Dan expressed his condolences and, of course, his ongoing support and friendship for Jack.

It wasn’t until Jack left the store and Dan was recounting their conversation with his associates that he was reminded of Nora’s most recent visit and purchase. Dan pulled the record and verified that the $7,800 watch had been charged — and when he investigated further, found that the Deeds account that had been used so frequently by both Jack and Nora over the years was officially in Jack’s name only. Dan’s bookkeeper was quick to point out that virtually all of Main Street’s house accounts involved long-standing couples and families with high profiles in the community. It was not typical for these Dalton women to have accounts of their own, because most of them simply signed on their husband’s accounts just like they did in all the other stores in town.

Sitting on the bookkeeper’s desk were the account statements due to go out the following day — including one addressed to Jack Deeds for the watch his soon-to-be-ex-wife had taken with her when she left him. Dan realized that Jack would be well within his rights to refuse payment, as he did not authorize the charge, and Nora never did have a legitimate account set up at Main Street in her own name. Dan’s biggest concern was the potential damage he might do by stirring up even more problems at so difficult a time for Jack. At the same time, he could hardly afford to simply give the watch away.

The Big Questions

  • Should Dan approach Jack about Nora’s purchase? If so, how??
  • Is there anything he can do about all the other “family accounts” at Main Street without running the risk of offending important local families who have been doing business the same way for generations?
Elie S.Salem, NH

What Nora did by law is considered fraud. The store lapsed in judgment by allowing anyone to buy on another person’s account, spouse or not. If they have a record of her actually signing for the purchase and maybe even video surveillance, I wouldn’t think there would be an issue because they are in the middle of the divorce. The court would rule that the purchase was made while still married and it would be a split of assets.

Phillip B.
Hinesburg, VT

Dan needs to call Jack and ask to speak to him privately. He should ask if he can come to his office and have a conversation today. Dan should explain that it’s been their practice to allow his wife to use his account, and that until now, it’s never been an issue. Show him the Rolex charged to his account and ask him how he wants to proceed. Tell him that you want to do everything possible to avoid any embarrassment. The store needs to contact all of the couples that are in a similar situation with accounts in one person’s name that are used by spouses and have a document signed allowing authorized users. Ideally, they would convert all accounts to a national company and not carry any house accounts. It’s best to have a radically candid conversation face to face and make a plan together.

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Etienne P.
Camden, ME

As a married couple, they are both responsible for the charges. The watch becomes part of the estate that will be divided in the divorce. When Jack and his wife separated, Jack should have closed or put a hold on the various accounts around town. The same could have happened in reverse where Jack went around making major purchases that affected both parties in the relationship.

Steve W.
Clearwater, FL

Dan should send out the statement like he always would and wait for the client to either pay or contact him. Going forward, Dan should send out a form to all his in-house accounts asking for them to include who is authorized to sign for purchases and request the names and signatures to be held in their file. It should be make clear that the main account holder is responsible for payment for purchases by any authorized persons on the form. Good service is one thing, but if they want to give their clients credit and stay in business, protecting their interest is just common sense.

Stan G.
Charlotte, NC

Jack should surely be informed of his soon-to-be ex-wife’s Rolex acquisition. It will just become part of the divorce settlement and Nora will be on the hook for the value of the watch when the marital property is divided. That doesn’t help Dan collect the debt any sooner, but he’ll keep Jack as a customer. As for the other longstanding “handshake” accounts, I’d probably put a $500 cap on a non-listed spouse purchase unless a quick verification and a verbal OK by the account holder is obtainable.

Kay D.
Andover, MA

Dan owes it to this longtime customer to share that information ASAP. He should call and ask Jack to stop by at his convenience. He should show him the statement and explain that, since they hadn’t seen either Nora or Jack for several months, they didn’t know about the pending divorce and put the charge on Jack’s account as they had for over 30 years. (And Nora may have charged similar purchases to her husband’s account at other stores, something his divorce attorney should address.) It is unlikely that Jack will refuse to pay the bill or file a complaint against Main Street since they’d had that arrangement for so long, but in either scenario, Dan should be gracious and agree to swallow that expense. True, it is not a small amount, but Jack has probably spent many times more than that over 30-plus years. It isn’t so much an issue of risking bad publicity (Jack probably won’t want the story out anyway) as it is about providing consideration to this very loyal customer.

Ira K.
Tallahassee, FL

I would have the bill go out as usual. Who knows: Jack might even pay it. I suspect if not, he will want to discuss the situation with Dan. If Jack doesn’t pay it, as a $3 million dollar store, eat it and be a hero. It’s a $4,500 cost of doing business; Dan can put it into advertising on the books. However; get okays and signatures from all the other “joint” accounts as necessary.

Stacey H.
Lincolnwood, IL

Dan should call Jack immediately and ask him if he knew about the purchase, and ask him how they were going to handle this like gentlemen. The handshake matters, and Jack dropped the ball by failing to alert management about the separation. Nora’s attempt at deception only succeeded because Dan trusted Jack, and Jack failed to call the store (and any others his wife used for gifts) to alert them that the status quo had changed dramatically. Maybe the proceeds of the watch could be paid for out of Nora’s share of the value of the house.

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Dan P.
Dulles, VA

I do not think that Dan should mention it. The bill was getting ready to be sent out; Jack would see the charge then. Then, when he called or stopped by to ask about it, they could have that conversation about her purchase. That way, the store would not look bad for telling him about the purchase, they were just informing him of what had transpired in the store.

Mike F.
Kokomo, IN

Similar situations have occurred, unfortunately for all concerned. Hopefully Jack has a good attorney, and this charge should be handled so Nora takes the liability for her Rolex.

I would definitely consider reaching out to Jack and have him come into the store and show him the statement. This debt can also be recovered through a court order, in the worse case (if she signed the sales slip). Unfortunately, no one at the store knew the recent situation, and she obviously did not disclose this when buying the Rolex.

Dennis P.
Johnstown, PA

Contact a lawyer and find out what the legal status is.

Follow direction of lawyer on options of how to handle, given the legal precedents.

Establish a method of contacting existing accounts and converting “open” accounts into legally binding agreements. If a store borrows on receivables in addition to other assets of the business, the bank would most likely want a formal method of financial accountability. Could be tactfully explained to the accounts and transitioned to a sound policy on the extension of credit.

I would hook up with a third-party financier and offer the balances to be formally acquired. The store gets paid up front, and the customer could be offered an extended interest-free period of time to pay off the balance in addition to an incentive of some sort for the customer (perhaps a 10 percent credit applied to the outstanding balance or a gift certificate). It would prevent future issues like that, create cash flow, and open a host of financing options for the customer at the time of a purchase.

Delton H.
Houston, TX

I would be up front with Jack and let him know what happened. The fact that the jeweler had no idea of the marriage breakup should not penalize him. I would ask Jack if he can cover the sale, or should I contact Nora to cover the charge?

Stephen R.
La Crosse, WI

Simple, send the bill to the Mrs. Someone should know where she went, since legally she is responsible for the purchase by her signing the sales slip.

Marcus M.
Midland, TX

Somebody has to pay for the watch! I would approach Jack with the dilemma and feel him out. I doubt he’ll settle up with it and take it on himself to get the money from Nora, but that would be ideal in a perfect world. Jack is still living in Dalton and will most likely start dating again or even re-marry, so my loyalty would be towards him and his future business. If Jack refuses payment, which is most likely, then I would contact Nora and tell her to return the watch or pay for it. If she doesn’t, I’d threaten to have her arrested for theft. It’s a tricky situation, but you can’t take a loss on this. Do what is best for your business and integrity. Put your fear of losing a customer aside and take care of business. And this is such an isolated incident that I would not worry about the rest of your in-house accounts. They’ll be fine.

Billy C.
Ridgefield, CT

Check with his attorney tomorrow on both matters!

Steve A.
Vienna, VA

Ah yes, the good old days when a handshake actually meant something. We started in 1973 and had lots of handshake purchases. As time went by, we got burned by a few of these faithful transactions. If I was the shop owner, I would call the soon to be ex-husband and ask him to come in to have a chat. At that point, explain what the begrudged wife did to him, and in understanding, offer to settle the account at store cost plus a mutually agreed to amount. It is understood that both the husband and the store had good relations for a long time, thus this is the fairest settlement that one could reach. When doing a property settlement between the couple, I am sure the Rolex issue would surface and be proven that the watch was purchased after she moved out. But all that is for expensive domestic attorneys to figure out.

Daniel U.
Hamilton, ON

The answer is very simple: Call our lawyers and the insurance company. We would discuss the situation with the account holder and work with him to resolve the situation quickly and decisively. This has nothing to do with their problems. She became a common criminal when she attacked us. We would respond vigorously to defend ourselves by preferring all possible charges against her. The soon to be ex-wife committed grand larceny, premeditated fraud and criminal misrepresentation, as well as many other crimes. She has demonstrated a total lack of conscience and personal honor.

This kind of abuse of our trust must be dealt with firmly so that any other people who might be in a similar situation would choose to leave us out of their personal problems. It is only by pursuing situations like this to the fullest extent of the law that we can hope to be left out of these kinds of situations.

Dianne H.
Eldon, MO

The wife knew exactly what she was doing. The jeweler should get her address from the almost ex-husband and send her the bill.

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Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at [email protected].

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