Syracuse (WSYR-TV) – The New York Attorney General’s office announced on Thursday that it had reached a $500,000 settlement with the buying club DirectBuy.
Members of the club pay a fee that entitles them to buy furniture, appliances and home goods directly from the manufacturer.
But Eric Schneiderman’s office says that the company used deceptive tactics to lure customers into the expensive membership fees, totaling thousands of dollars.
Investigators say DirectBuy invited people to open houses, offering free trial memberships and other incentives, such as free gifts and prizes.
Once the potential customer arrived at the event, however, the merchandise was no long offered or it wasn’t free.
The investigators say the consumers were then pressured to buy full-priced memberships right away, or forever lose the opportunity to join.
Then, once they were members, consumers said that they did not receive the savings the company had promised. Instead, shipping fees and other costs, which DirectBuy had not addressed, wiped out the savings the consumers had been promised.
According to the AG’s office, DirectBuy declined to tell members:
- The majority of purchases are through catalogs;
- That most shipments are to club locations rather than members' homes and that the members then had to pay to ship their merchandise from the club to their homes;
- That individual manufacturers, rather than DirectBuy, determine cancellation and refund policies. In addition, several clubs continued to enroll members knowing that the club would imminently cease operations.
A DirectBuy Syracuse location was among those that closed.
In addition, many consumers financed their membership through Beta Finance, an affiliate of the company that was not properly licensed as a retail sales finance company in New York State.
The AG’s office says that anyone who fell for DirectBuy’s pitch may be eligible to get their money back.
Members who entered into a DirectBuy contract after January 2007 have until April to file a complaint if they haven’t already filed.
For help, call the Attorney General at (914) 422-8818.
More information is available on the Attorney General’s web page