DirectBuy has reached a $500,000 settlement with New York for deceptive sales practices, Attorney General Eric Schneiderman said today.
Attorney generals from 27 states
sued got involved with DirectBuy after Consumer Reports found that the buying club, which has stores in New York City, Rochester and Elmsford, Westchester County, had engaged in misleading and deceptive sales practices.
Added: The attorney generals got involved after a private, class-action lawsuit, and a judge rejected a settlement after attorneys general opposed it.
The attorney generals in 2011 rejected a settlement with the Indiana-based company. Schneiderman said New York has reached an agreement, and consumers will be able to seek restitution.
“DirectBuy lured consumers into expensive memberships by promising exclusive member-only deals with substantial savings over retail prices. This company failed to deliver on its promises by taking advantage of consumers who were looking to save hard-earned money,” Schneiderman said in a statement.
Consumers pay a fee to join the club and are expected to get savings on merchandise, such as furniture and appliances. But the lawsuit claimed the company did not provide the savings.
The agreement, Schneiderman said, will require the company to stop the deceptive practices and maintain a three-day cancellation and refund procedure.
Under the agreement, New York club members are eligible for restitution of their membership fees if they entered into a DirectBuy contract after January 1, 2007, and have filed a complaint about the business by April 1.
There was no immediate comment from the company.
Updated: Here’s the company’s comment. It said that DirectBuy’s New York franchisees were not parties to the agreement in New York, despite the settlements.
“We are committed to providing access to a better life and tremendous value to consumers. With this in mind, we felt that the best course of action for our members, franchisees, manufacturers, and employees was to enter into this agreement with the New York Attorney General.
We have continuously updated and improved our sales policies in order to properly educate potential members about our unique business. An example of one of our improved training practices has to do with how we explain our business to potential members. Many do not realize that in addition to being able to save 20%, 30%, up to 40% off retail store pricing, DirectBuy members receive unparalleled customer service. For example, most clubs have a team of product specialists and interior designers to help them with their shopping needs.
DirectBuy is proud of its 40 year track record of providing unmatched savings, selection, and service to members across the United States and Canada.”
Consumers who purchased a membership from DirectBuy store that has since closed may also be eligible for restitution, Schneiderman said, if there is not a store within 25 miles of the closed one.
To file a complaint, call the attorney general’s office at 914-422-8818.
DirectBuy locations in New York are:
• DirectBuy of Albany, 356 Troy Schenectady Rd., Latham, NY 12110-3354
• DirectBuy of Brooklyn & Queens, 72-25 Queens Blvd 2nd floor, Woodside, NY 11377
• DirectBuy of Long Island, 20 Oser Ave, Hauppauge, NY 11788
• DirectBuy of Rochester, 45 Saginaw Dr., Rochester, NY 14623
• Direct Buy of Westchester County, 2269 Saw Mill River Road, Bldg 1S, Elmsford, New York, 10523