First of all, DirectBuy does not appear (to me) to be fraudulent, but they do use high-pressure tactics to coerce people into signing a membership contract that "average" consumers will find worse than useless.
DirectBuy promises that, as a club member, you will be able to save a tremendous amount of money on your ordinary and extraordinary purchases - such that you will save many times the cost of club membership. I believe this statement might possibly be true, but only if you plan to spend $10K to $15K each year for the next 10 years on products that are handled by DirectBuy. W
here the DirectBuy operation borders on a ripoff, is that they "force" you to listen for an hour or more to their brainwashing hype about all the money can save and then require you to sign their contract - now or never - without having a chance to sit down and run some numbers for yourself. I am convinced that most people will find, as I did, that the savings just aren't there. If such people sign the DirectBuy contract, they will end up spending thousands of dollars on a club membership that will yield them savings in the hundreds of dollars. Not a good deal for the average consumer, and DirectBuy pulls out all the stops in their efforts to keep you from figuring that out.
Apparently, the cost of a DirectBuy membership varies according to the particular store you deal with. On this Website, I have seen membership fees mentioned as low as $4300. For the store located in Greenville, SC, the membership fee is $5800 over 10 years. The initial fee is $4200, to be paid in installements over the first two years, followed by $200 per year for the next 8 years. I didn't stick around long enough to find out what payment terms are offered for the initial $4200. Once you sign up, you are committed for the full 10 years and the full $5800. (Actually, I think you could probably beat that in a legal challenge, but who wants to get involved in a lawsuit?)
After listening to their sales pitch for an hour or more, you are given a one-time-only opportunity to sign the contract. If you don't sign then and there, you will never be given another chance - or so they say. Most important for DirectBuy is that this tactic does not give you a chance to investigate their numbers and figure out whether or not you actually will be able to realize the savings they have promised you (Note that their contract specifically states their oral promises are non-binding!!).
In the DirectBuy sales pitch, they show you several examples of products you might buy and show you how much of a markup the retail store is making on these items. I'll admit, this is impressive. You listen to this presentation and think, "Wow!! I can save thousands!!". Well, think again.
First of all, the DirectBuy sales pitch is comparing "true" retail prices to the manufacturers' wholesale prices - that is the "bottom line" in the DirectBuy catalogs. The truth is (as I found out), you can find these same products at substantially less than the "true" retail price if you shop around some. Especially if you shop the Internet.
Secondly, what DirectBuy fails to mention in this part of the sales pitch is that many of these items are subject to an 8% club fee. I was never able to get a clear statement about this fee - what it is for and what products are subject to it. I was told that large home appliances are not subject to this fee, but that furniture items are. But again this is all oral, and the DirectBuy contract specifically disavows all oral statements made by their sales staff. All I can state with certaintly is that you can expect the price you actually pay for many items to be 8% greater than the catalog price - the comparison price used in the DirectBuy sales pitch.
Thirdly, you end up paying two transportation charges. The manufacturer ships to the DirectBuy store (which you pay for) and then you pay DirectBuy to deliver to your home. DirectBuy does bring the items into your home (or at least they say they do - non-binding oral promises again!!), and many freight services used by Internet retailers do not. But many local retailers will deliver for free - and even haul off your old items to boot. Bottom line, again you can expect to pay substantially more than the catalog price - the comparison price used in the DirectBuy sales pitch.
Finally, you will have to pay the sales tax applicable to the local store - even if you live out of state (I would have had to pay SC sales tax, even though I live in NC). Most Internet purchases are sales tax free, as long as the retailer does not have a retail outlet in your state. North Carolina collects some of this money through an estimated tax on your yearly state income tax form, but in most cases, you still get a tax break. You end up paying the full amount only if you are scrupulously honest about how much you have purchased out of state - and have kept the records even to know for sure.
The bottom line is this: in the DirectBuy sales pitch, they compare their catalog prices to "true" retail prices to make their deal sound really attractive. The truth is, you will end up paying a lot more than their catalog price and, if you shop carefully, you can purchase the same items elsewhere for a lot less than the retail prices DirectBuy uses for comparison. Your actual savings will be a lot less than their (non-binding!!) oral promises. And DirectBuy will hustle you just as hard as they can to get you to sign their contract before you get a chance to figure that out.
My experience: I stumbled over DirectBuy on the Internet. It sounded good. I called for more information. The DirectBuy representative refused to tell me anything of substance over the phone. I was sent a packet by mail that was equally uninformative, but which did include a "Visitor's Pass" for a visit to the store. Well, I bit, and I made an appointment to go down to Greenville (over 250 miles away). But I was suspicious because they were so obvious about not wanting to give me any real information.
I am planning a thorough renovation of my home and had already more or less picked out the new kitchen appliances I wanted to install. So I did some serious shopping for these appliances and prepared an Excel spreadsheet with the model numbers, vendors, prices and shipping costs for these appliances. The total price for these appliances (all Internet purchases, it turned out) was $8,443.76, including shipping ("threshold" delivery).
After sitting through an hour and fifteen minutes of DirectBuy brainwashing, the sales representative finally got down to a real discussion with me. I insisted that he show me the DirectBuy prices on the appliances I had selected. Without too much reluctance, he agreed. But he read the prices out of the book. I wasn't allowed to see them. In fact, I was not allowed to bring home the paper I wrote the prices on. In any case, the sum of the DirectBuy prices for these appliances was only about $450 less than the quotes I had collected. And that was without any 8% fee, without any shipping and without any tax. I was told (non-binding oral promise!!) that the 8% fee did not apply to appliances such as these. I was told (non-binding oral promise!!) that the manufacturer was offering free shipment to DirectBuy.
So, I would only have to pay the DirectBuy delivery fee and SC sales tax. We did not figure the exact cost of these two items and I did not try to figure how much NC sales tax I would end up paying on the equivalent Internet purchases, but it was clear that the cost of thes appliances purchased from DirectBuy and the Internet vendors I had found would be roughly equal - plus or minus maybe one or two hundred dollars. I could actually end up paying more by purchasing from DirectBuy, especially if the sales representative was "mistaken" about the free shipping and the 8% fee. Non-binding oral promises. No recourse.
The sales representative was quick to point out that the retail markup on large appliances was less than the markup on furniture, kitchen cabinets and such. He promised (non-binding!!) that I would see substantially greater savings on these items. But he also admitted that these items WERE subject to the 8% fee. And I did not have any comparison prices to check. I was told I had to sign a contract then and there - or never have a chance again. I was told that I could not cancel the contract if I later did price comparisons and determined that the promised savings were not there. I got up and left.
So, if you ever think about doing business with DirectBuy, do your homework before you go. Go through your home and total up how much you have spent in the last few years on items that DirectBuy handles, and that you would be prepared to order sight-unseen from a catalog, no returns allowed. Add in any major expenditures you are planning, such as a kitchen renovation. If this total amounts to less than $10K to $15K a year over a 10 year period, don't even bother to make the visit. DirectBuy can't help you.
By the way, DirectBuy handles almost everything you might need in your home except food and toilet paper - and women's clothes. They do handle mem's clothes - at least things like leather jackets - but they seem to feel that women are too hard to please and have to try things on before they buy (no returns allowed!!). They don't necessarily handle every possible brand (they don't handle LG appliances, for example), but their vendor list IS impressive.
Anyway, back to the homework. Assuming you think you might spend $10K to $15K per year with DirectBuy, make a detailed list of some items you have purchased (or plan to purchase) in several catagories. Do comparison shopping to find the best prices you can for these items, to include shipping and sales tax. Then, during your DirectBuy brainwashing session, insist on making a full comparison between these prices and the total DirectBuy cost (catalog price, plus 8% fee, plus transportation and delivery costs, plus sales tax). My recommendation is that you sign the DirectBuy contract only if all of these numbers indicate that you can save two or three times the $5800 membership fee over the course of 10 years. I am betting you will find you can't save anywhere near that much money by buying through DirectBuy - and that you will end up walking out. Just like I did.
Raleigh, North Carolina