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]