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Buying club, AG agree to $500K settlement

Buying club DirectBuy, which reached a $500,000 settlement with the state attorney general's office, has a location in Woodside. Photo by Rebecca Henely
TimesLedger Newspapers

A recent $500,000 settlement between the state attorney general’s office and an Indiana-based buying club could entitle some Woodside shoppers to restitution.

Attorney General Eric Schneiderman announced Jan. 17 his office discovered that DirectBuy, which operates a showroom in Woodside on the second floor of 72-25 Queens Blvd., had advertised shoppers could save money through purchasing furniture and other appliances via the club, but then used aggressive sales tactics and hidden extra costs to effectively wipe out the promised savings. DirectBuy is based in Merriville, Ind., and has locations throughout the United States and Canada.

“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.

DirectBuy said in a statement that it had recently changed its sales policies and how its employees explain their business to potential members.

“We are committed to providing access to a better life and tremendous value to consumers,” DirectBuy said. “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.”

The AG’s office said DirectBuy would entice consumers to come to an open house at a club location, such as the one in Woodside, to sign up for a free trial membership and get free gifts or prizes. However, when the customers arrived at the clubs, there were no free gifts and the sales team would pressure the customer into signing up for a paid membership that cost thousands of dollars or they would lose their opportunity to join the club at all, the AG’s office said.

DirectBuy’s salespeople also did not tell customers that most purchases are through catalogs, that the items are shipped to club locations, that to ship to the member’s homes instead of the showrooms would include additional shipping charges and that cancellations and refunds would go through the manufacturers of the goods and not DirectBuy, the AG’s office said.

As part of the agreement, DirectBuy is now required to set up a three-day cancellation and refund procedure and make it available to customers, to be upfront about its fees, to keep proof of its savings claims and comparison shopping advertisements and to honor any advertising of free gifts, among other requirements, the AG’s office said.

Customers of DirectBuy of Brooklyn & Queens may be eligible for payback of their membership fees. Other locations covered under the settlement include Long Island, Albany, Rochester, Westchester County and the defunct DirectBuys of Manhattan, Greater Buffalo, Dutchess County and Syracuse.

Restitution is available to New York club members who joined after Jan. 1, 2007, have not bought $5,000 or more in merchandise or received a refund, and have filed a complaint with the AG, Better Business Bureau or consumer protection agency, the AG said.

If a customer has not filed, he or she can do so before April 1 with the AG’s office and can call 914-422-8818 for details.

Reach reporter Rebecca Henely by e-mail at rhenely@cnglocal.com or by phone at 718-260-4564.

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