Judge Denies DirectBuy Settlement For Being Too Paltry

A judge has given the thumbs down to a proposed settlement in the class-action lawsuit against DirectBuy over its pricing practices. The settlement would have been free memberships to DirectBuy, worth $3,000, to around 800,000 class members. In other words, they were getting sued for being a bad deal and having a problem with their prices, and their make-good is a free pass so you can come in and keep paying those same prices.

The attorneys general of 27 states agreed that the settlement was too small, if not ironic, in their amicus curiae brief (PDF), writing, “The proposed settlement is, in essence, a sales vehicle for defendants designed to drive current and former customers into membership renewal contracts and to the same manufacturers and suppliers from whom defendants have acknowledged receiving kickbacks and incentives.”

“The court does not view these claims as so weak that it would be reasonable to settle claims arguably worth over $2 billion for, at most, only a hundredth of this amount,” wrote the judge in her opinion.

DirectBuy markets itself as an insider’s buying club where for the price of a membership customers can get access to direct wholesale rates for home furnishings.

When Consumer Reports did an undercover investigation of Direct Buy back in 2007, they found that even if you managed to save 25% on your purchases after joining, you would have to spend over $20,000 just to recoup your membership cost.

DirectBuy Holdings Class-Action Accord Rejected by Judge as Too ‘Meager’ [Bloomberg]
Wilson et al v. DirectBuy, Inc., et al (PDF)

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