Direct Buy: Pay $5,000 To Save?

Consumer Reports investigated wholesale shopping club “Direct Buy.” to see if the deals lived up to the commercials. They were unimpressed.

For those of you who haven’t been subjected to Direct Buy’s frequent and annoying commercials, the club is marketed as a store with no mark-ups, then Direct Buy cues the parade of McMansion owners who claim to have saved some ridiculous number like $80,000 on kitchen cabinets alone. (That they made kitchen cabinets that cost more than $80,000 was something we didn’t know. If it’s not in the IKEA catalog it doesn’t exist.) Anyhow, Consumer Reports says:

To evaluate the pitch, we went undercover at two DirectBuy franchises in New York. Both gave us the same hard sell and offers of up to 70 percent off retail prices if we were to join. Only after an hour and a half of sales pitches and video testimonials from members did we learn the membership fee: $4,900 to $4,990 (plus tax) for three years and then $190 a year for seven more. Financing is available at 17.75 percent.

After the fee disclosure, we discovered that we had to sign up on the spot or never come back. We couldn’t bring DirectBuy’s “confidential” prices elsewhere to comparison shop, the representatives said, because this would likely anger retailers who might then retaliate against the manufacturers by refusing to sell their merchandise.

The fine print in the DirectBuy contract says you cannot return items, cancel orders, or terminate your membership. When we asked if, after plunking down $5,000, we could cancel and get a refund, a salesperson said, “You’ll have to check state law.” A review of New York state law revealed that the three-day cooling-off period for canceling contracts wouldn’t apply in this case.

Tacked onto the cost of merchandise–which you select from catalogs since DirectBuy has limited showrooms–are a 6 percent handling fee, shipping fees, and tax. Goods are typically shipped only to your local center, so you might pay additional fees to actually get your new stuff home.

So were the prices good? Consumer Reports didn’t think so. They found cheaper prices on-line in a few cases. Ultimately, they concluded that Direct Buy’s lack of transparency made it difficult to evaluate whether it was a good deal or not. Which leads us to conclude that for the vast majority of consumers it probably isn’t.

With DirectBuy, it will cost you a lot to save [Consumer Reports]

Comments

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  1. theblackdog says:

    I used to get mailings from them all the time, too bad I live in an apartment so I have no need for that “store.”

  2. theblackdog says:

    I used to get Direct Buy’s “guest pass” mailers all the time, too bad I live in an apartment

  3. ry81984 says:

    Direct Buy is a scam.

    Everything else is overpriced. I have yet to read in a forum where someone actually saved money.

    Also you cannot return anything, even if they accidently send you the wrong color cabinets or even the wrong size. You will be stuck with something you did not order and cannot use.

    They do not deliver anything locally, you have to rent a uhaul or have a truck to bring your merchandise home.

    Even if their price is $1000 cheaper than a local store, you still have to pay $5000 membership, for delivery, and you take a chance of getting the wrong item and you losing your money.

    You have to be pretty stupid to join Direct Buy.

  4. ry81984 says:

    Direct Buy is a scam.

    Everything is overpriced.

    They do not deliver anything, you have to rent a uhaul or have a truck to get your merchandise.

    They do not take returns, even if they make the mistake. If they send you cabinets that are the wrong color or the wrong size, you are just out of your money.

    They make you pay $5000 in membership fees before you even know if you will even buy something from them.

    Even if they could sell cabinets at $1000 dollars cheaper, you still have to pay for delivery and $5000 membership fee. If they were really cheaper their company would not benefit people who are just remodeling just one house, you would have to be in the business of flipping many houses to have any savings.

    You have to be a complete moron to give a company like Direct Buy $5000.

    I cannot see how what they are doing is even legal?

  5. pinkbunnyslippers says:

    Wow this is great advice to those who are looking to remodel or undertake a HUUUUUUUUUUUGE project at home. Their ads and infomercials make it sound tempting, but it just goes to show my dad was right – if it sounds too good to be true, then it probably is. :)

  6. robotprom says:

    I’d rather shop at Ikea.

  7. Kogita says:

    Is this even legal? ‘Confidential’ prices, contracts that aren’t subject to the usual ‘remorse’ laws, financing at 17%?! They surely must be doing something that would get them canned.

  8. medief says:

    I always wondered if there was a dark side to Direct Buy; I didn’t realize it was that dark!

    BTW I see a lot of love for IKEA at various times. I must be uncultured swine for not knowing, but what’s the big draw?

  9. vdragonmpc says:

    I went to one of these ‘sales events’ a while back. They sent me a post card with a key that I could try to see if I had won a Ford Explorer, 500$, a computer or a ‘tennis bracelet’.. If you ever go to these they are an absolute joy to heckle. I asked a lot of questions during the seminar as the presenter kept focusing on a young boy and a lady in the front. What was odd was that most folks were much older than us as in 50’s up. I have no idea how they latched on to me… Even funnier was when the guy wrote the membership pricing plan on the whiteboard. I exclaimed “Wow thats a lot of money to save… oh wait you want ME to pay 4600$ TODAY for a program I have never heard of to SAVE money on things I pay less for online? How is that ‘smart shopping?” We were later sat at a table with a slick salesperson that had all sorts of catalogs that I could order from and I might save 20$ here or there buying things…

    But in the end I was told “we dont think this is the program for you” and I was escorted from our ‘pressure table’ to the door. I asked “what about my key” and they let me try it as I did I said “I bet all I bet is a 99 cent bracelet”… Yup and as we were leaving the pile of people that got up with us all said “look we all won the same prize how shocking”

    We did have fun messing with the guy, the showroom is on Midlothian Turnpike in Richmond VA.. We turned them in to the Attorney General’s office but they are still open for business. I couldnt at that time see how it wasnt a scam.

  10. Notsewfast says:

    @medief:

    It depends on where you live… the Central US tends to be devoid of all IKEA presence. I grew up in Texas, so I feel your lack of knowledge on the subject. When I lived in CT, I had access to them, and they are awesome.

    Basically the draw is that it is stylish stuff for a small amount of money. A lot of times you’ll hear people compain about the fact that nearly everything requires assembly, but in general you can’t find better prices on better (new) stuff.

    The stores are also interesting to walk through if you get a chance.

  11. Dead Wrestlers Society says:

    I’ll never look at Tanya Memme the same way again.

    Actually, I’ll never stop looking at her.

  12. Underpants Gnome says:

    I remember going to a sales presentation from them in college. They offered us broke college students a “bargain” rate of only $3500 to join. Between that and the whole “this offer expires when you leave the room” thing, the entire room of 50 people walked out before he even finished his presentation. That was really satisfying.

  13. MasterShake says:

    The worst financial decision I’ve ever made was to join Network Direct, a similar “buying club” that was supposed to save me $$$$$ over my lifetime. Same hard sell at college and I bought in. Worst $1000+ (just to joint) I have ever spent. I can now find almost anything I’d buy from them on the internet for less. The do offer a “double the difference” price guarantee, but it is fairly limiting. If anyone has had a great experience with them please post your tips!

  14. morganlh85 says:

    I’ve only heard horrible things about this place. People getting damaged items then not being allowed to return them, wildly varying membership fees, items that are priced much HIGHER than comparable stores, etc.

  15. FLConsumer says:

    I saw the ads for this place while I was in NYC and didn’t know about the “$5k entrance fee” but it still looked fishy to me.

    Ben: Even in very high-end homes ($5+ Mil), you’re going to have a difficult time reaching $80k in kitchen cabinetry, let alone saving that much. Countertop surfaces can certainly help you get up to that level, but it’s still a bit of a stretch. I know the granite I had imported from Finland wasn’t cheap, but it certainly didn’t reach the $80k level, even with true custom cabinetry with inlays.

  16. nursetim says:

    There is a local sports talk show host who does commercials for this outfit, and I always wondered how they made any money. Now I know. Wow.

  17. Veeber says:

    The only way I can imagine getting to 80k on cabinets would be if you’re looking at multiple kitchens (a combined outdoor/indoor/butler’s pantry?) Either that or the wood is some black market endagered species hand carried through the jungle by natives who need to swim the product through the pacific.

  18. mignolan says:

    Okay … now a word from someone who’s generally happy with DirectBuy.

    My wife and I joined several years ago, when we were moving from a smallish apt. in Brooklyn to a fairly large house in the Hudson Valley.

    In that case? Joining made huge sense: we were furnishing a *house*, and membership saved us $thousands — enough to cover the enrollment costs and much more, thought I seem to recall they were lower then as compared to what’s been quoted here. We ordered sofas, reclining chairs, a high-end treadmill, a kingsize mattress and boxspring, and a niiice oak bedroom furniture set — even a couple of pairs of shoes!

    As members, we’re able to select fabric, colors, sizes, manufacturing materials, etc., and we’re always able to compare DB’s prices (generally available online) with what we’d find elsewhere. Plus, we could do research on models, options, etc., online, or via on-site catalogs. I can’t stand malls, so that was a major plus. Plus, one can often select from every model and feature a manufacturer offers.

    As you’d expect, certain items are discounted more than others, so depending on what you need/want, it’s either worth it or not. (They warned us ahead of time that’s the case — for example, that their prices on electronics are only about equal to what you’d find in a specialized retailer.)

    As for delivery, most of the time we get a call saying the product has arrived at the local warehouse, and that we should come and pick it up — hardly a burden. It’s a modest fee to arrange delivery of larger items, if necessary.

    For what it’s worth, I had no problem returning, and getting a replacement for, a rather pricey (even for DirectBuy) mattress by a major manufacturer. They had some reasonable questions and requests to ensure that the item was flawed beyond usual wear, and arranged a replacement. It was within the warrantee period for the product, so they honored it.

    At no time have I felt like it’s a scam, and we’ve been treated well from day one.

    I’m a tough customer with high expectations. Yet, I’m pretty darn pleased with the experience since we joined — I’m contributing here in part to give a balance to the negativity that’s been expressed so far. While DB membership worked for my wife and me, I’m sure it’s not for everybody. For us, having a house to outfit made it worthwhile.

  19. etinterrapax says:

    Yeah, I’ve only ever heard terrible things about them too, but I don’t trust anyplace with an exorbitant membership fee. That’s how they’re making their money. I doubt we’ll ever be at an income level where spending $4800 for the privilege of spending more money will be feasible, let alone wise.

  20. fonzette says:

    I used to work at this place 10 years ago, when it was called United Consumers Club. (NOT as a salesperson.)
    Not to argue with the overwhelming negativity above, but (at that time, at least) it actually WAS a pretty good deal if you were planning on some huge overhaul of your house. The prices were quite good – the same that retailers paid.
    Of course, that may no longer be the case.

  21. spinachdip says:

    @Secret Agent Man: True that.
    The reason they’re cheap is precisely because everything requires assembly – Ikea’s entire business model is based on flat shipping. Everything’s flat = cheaper to ship in volume = lower prices.

    Back on subject though, I don’t understand how these price clubs aren’t subject to the cooling off period. Isn’t that required for any contract? Is there a lawyer here who can explain?

  22. ry81984 says:

    @fonzette:

    You are suck a liar. You must work for them now as sales person.

    Search google you will find hundreds of stories that completely contradict what you have said.

  23. girly says:

    You would have to be a big spender to save with them.

    Think of it, whatever their fee is (and there is one) you would at least have to save that much JUST TO BREAK EVEN.

    And even if they are 50% less…that means thousands spent before you even start ‘saving’.

    Maybe, just maybe, it would work for a homebuilder or upper middle-class big spender.

    But not for the average person

  24. Skeptic says:

    Back on subject though, I don’t understand how these price clubs aren’t subject to the cooling off period. Isn’t that required for any contract? Is there a lawyer here who can explain?

    Those laws are really limited. In California they only apply to in-home sales–a distinction that no longer really makes sense now that Encyclopedia Salesmen and such are so rare.

    Many people are under the mis-impression that other kinds of sales contracts are subject to a “cooling off period.” In California, at least, that is false.

  25. HeartBurnKid says:

    HBK’s first rule of bargaining: the only correct answer to a high-pressure sales pitch is “No.” The only reason anybody puts the screws to you like this is to take away your time to think about your purchase, so you don’t start to see the holes in what looks like a good idea at the time. And it seems like DirectBuy is the highest of high-pressure. “Take the deal now or NEVER come back”? Yeah, immediately seems fishy.

  26. Charles Duffy says:

    @ry81984: Accounts on the Internet which indicate that DirectBuy’s pricing 10 years ago didn’t match retailer prices? Really?

    I don’t doubt that DirectBuy is (particularly at present) a bad idea, but you’re hurting any pretense of objectivity by disputing that claim so vehemently while leaving it to the reader to find proof.

  27. consumerlawdog says:

    I am an attorney in Ohio and have had multiple complaints about Direct Buy. I am preparing a class-action law suit to file in Federal District Court in Dayton and would like names of members who have had enough of the Direct Buy experience. I’ll provide more info later if I get a respones.

  28. MBGirl says:

    @consumerlawdog: I am more than fed up with Direct Buy experience. I live in Florida. Please let me know what I need to do to participate. I’ve been combing the internet looking for someone that has or wants to file a class-action suit.

  29. jimback says:

    I looked into Direct Buy myself sometime ago because I was moving into a larger home and was going to remodel the kitchen, but when I saw the membership fees and that was only for 3 years I said let me think about it. The sales person tried everything he could to not let me leave. When he left to go get his sales manager I made a bee line for the door.

    After that I started looking into other direct buying clubs and found another company that offers factory direct savings on everything I needed in my home plus savings on jewlery, cars, vacations, plus the lifetime membership was only $2195, on my first purchase I saved more than that and the membership covers my entire family. My Parents, GrandParents, Brother, Sister, even my kids will be able to use it when they are old enough. Let me know if anyone would like more information about this company.

  30. jackrat says:

    @consumerlawdog:For the Attorney who wishes to file a class action suit. I live in columbus, OH and would love to be a part of your suit. Let me know what I need to do.

  31. traderrick says:

    I joined Direct Buy I believe it was in 1994. At that time the membership fee was only $1300 or $1400. Although it was unwritten in the contract, the sales person who sold us the membership said we were purchasing a “lifetime” membership”. For the first three years there were no dues. After three years, the dues were about $95, up until 10 years. After 10 years, we were told we could continue our membership by paying whatever the prevaling dues were at that time. Unfortunately, the club that we joined refused to honor that agreement. The owners of the club were not denying that they agreed to this, however, they said they could not continue to be profitable and stay in business they did honor that agreement. They said we would have to pay half of the current membership fee if we wanted to continue being members, which was over $2000. I discovered that there were other people that were lied to and told the same thing in order to get their business. i think these clubs are completely dishonest. They just change the rules to suit themselves. I was just wondering if anyone was told the same thing and thinks we have any recourse?

  32. DoraOcella says:

    @null:
    I am a former employee of the DirectBuy in Gurnee, IL. The showroom I worked
    at was a total joke. It did not serve its members well, nor treat the
    employees with the faintest of dignity. The owner was actually verbally
    abusive (as in screaming at people in a crowded showroom), etc. If you would
    like some info from me just reply with what you are looking for.

  33. consumerman says:

    I went to a presentation yesterday, even after an hour they still would not let me look at the price books. The salesman started making some wild claims like I could buy a citizen titanium ecodrive watch like I just paid $125 (msrp=250) for $50.00. What happens if you were to pay the membership fee then find out that the salesman lied? The Idea that a factory would sell 1 piece of furniture to me for the same price as they sell to a big buyer is crazy. If you were the factory would you rather sell to 500 seperate people and arrange delivery for each or one professional buyer in one go.

  34. Anonymous says:

    See the thing is.. uneducated people should not comment on things they don’t know about yet. You don’t know/can’t see what directbuy has to offer if you do NOT have the needs or if you have not been to an openhouse. First of all, the “50 people walked out in the middle of tour” is impossible. Tours are done with a MAXIMUM of 15 couples. There are 3 other tour rooms as to which people will do multiple tours if there is overflow. Yes the cost is 5000, BUT, you make the money back garauntee. What you have to understand is even if you’re only saving 10, 20, 30bucks on some items, that is 10, 20 30bucks worth of markout. It’s easier to see the benefits if you’re doing a kitchen (get your money back with one purchase) or remodeled or building.You join DirectBuy because it is a SMART way of buying – projects are icing on thee cake. The sales tour and closing are all scripts, they are made to NOT be high pressured, but to understand what lifechanging event is taken place. If you answer the questions truthfully on the phone screening, if you can not benefit from DirectBuy, you do not get invited in. DirectBuy is there to help, after the 3 years of a 10 year membership there is no more bills, and you’re able to keep the 30, 40 1,000 or 4.000 dollars for your personal use. You pay the 5000 weither you’re with DirectBuy or not, that’s what YOU HAVE TO UNDERSTAND. With DB there is a cut off, in retail there NEVER IS. The person who wrote they yelled out after the dues were shown is lying, didn’t happen – it can’t. If it did he would have to leave. Go to a tour, before talking out of your ass.