DirectBuy Class Action Proposed Settlement Rejected By Federal Judge

May 16, 2011

In a win for consumers and the position taken by the attorneys general for 37 states, the District of Columbia and the Commonwealth of Puerto Rico, U.S. District Judge Janet C. Hall Monday denied a proposed class-action settlement in a lawsuit against DirectBuy, Inc.

In a 32-page decision, Judge Hall said the proposed settlement failed to meet the heightened test of fairness for early class-action settlements because it failed to account for state consumer protection claims, it overstated the risks of success, and provided a “relatively meager settlement” when viewed in light of the best possible recovery for consumers.

In denying the motion to approve the settlement, Judge Hall stated that the “attorneys general forcefully argue that the settlement is both overstated and undervalued.”

Attorney General George Jepsen had filed an objection in an amicus curiae brief on behalf of the attorneys general, in what was the largest number of states joining in opposition to a proposed class-action settlement since the passage of the Class Action Fairness Act in 2005.

“This decision represents a win for those consumers who were looking for reasonable compensation for the losses they suffered because of DirectBuy’s allegedly deceptive practices,” Jepsen said. “This ruling means the case against DirectBuy will continue in hopes of a fair result for consumers.”

He credited Assistant Attorney General Matthew Fitzsimmons for his work on the case and thanked Assistant Attorney General Brant Harrell of the Office of the Attorney General of Tennessee for his assistance on the brief.

The pending private lawsuit names Direct Buy, Inc., United Consumers Club, Inc. and DirectBuy Holdings, Inc. as defendants.

It accused DirectBuy of fraudulent misrepresentation because the company implied that paid memberships would entitle customers to purchase goods from manufacturers and suppliers at actual cost. However, DirectBuy allegedly received kickbacks and incentives from suppliers and manufacturers of goods purchased by DirectBuy members, which inflated the cost of the goods. The lawsuit alleges that DirectBuy did not tell customers of the arrangement until early 2009.

Jepsen said the so-called free and reduced-price memberships offered were not a fair, reasonable and adequate settlement for most of the customers harmed. Also, the proposed settlement would not prohibit similar future conduct by DirectBuy and the proposed attorneys’ fees were excessive and disproportionate compared to purported benefits to consumers.


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21 Responses to DirectBuy Class Action Proposed Settlement Rejected By Federal Judge

  1. Barbara Hober on January 25, 2012 at 12:35 pm

    Just returned from my local Direct-Buy that is supposedly moving from one location to another in Ft. Myers Fl. I only know this because I saw an ad on Craigslist last night that was selling all of the stores interiors. I thought..hmmmm red flag. so I went there today and recorded my visit with my iPad. I soooooo regret being among the thousands roped in by the “hard sell”. A very expensive lesson we or no one for that matter can afford to learn in these economic hard times. If I can help in this lawsuit in anyway I would be glad to do so and share my recording with you. Interesting that she initially states that their shelving is not for sale til I tell her I saw it on Craigs List last night among other red flags on the recording. I will follow this up next Wednesday when they are supposed to open at their new location. I was not notified by email either as she said I should have been on the recording. I would greatly appreciate some or all our money back at some point.

  2. Michael on March 12, 2012 at 8:22 pm

    I joined Direct Buy in Dutchess County New York. I had all of the same experiences that all of the other testimonials stated. One of the worst mistakes of my life. I went to my local Direct Buy today after renewing my membership 3 days ago and found that they were closed. No explanation and no warning. Plus, they were still selling memberships as of only 3 weeks ago. Those poor people. I would like any information that anyone might have on a class action law suit. I want to get involved immediately. Any information would be greatly apprecciated.

    • Mike on November 13, 2012 at 7:30 pm

      Yes I also got suckered last week had my call in within 3days but it was just a call not a letter. So convientl! Anybody know of any class action lawsuits.? 11/8/12

  3. s.white on July 6, 2012 at 1:08 am

    My husband and I acceted an invitation to visit the Buy Direct Showroom ,unaware that unfair/pressured tactics would be deceptively used to pressure us into signing a contract under duress. Although we explained we only came for information purposes to help us decide if this would be of benefit to us we were told that we had to sign a contract that day or otherwise never be eligible to join; information never provided while we were being enticed to visit the showroom. After being pressured we reluctantly signed the contract and although we explained that my husband’s job would possibly be laying off due to decreased manufacturing work and my salary additionally chanced being cut due to the financial difficulties of the public hospital for which I was employed, as well as the pending decision of the state to require employees to contribute 3% to their retirement system. We explained it woud be approximately several months before we had more definitive answers on these matters. Still we were encouraged to sign and deceptively lead to believe that should these events take place; we would be able to cancel the contract, while being constanly reminded that a failure to sign that day would forfeit any chance latter to join the club. Although we were upset that this information was not provided prior to our visit we caved to the pressure and provided $600.00 of our already lean saving account. We had no idea we would have to do this at a time when everything was so up in the air or otherwise we would have never accepted the invitation.

  4. s.white on July 6, 2012 at 1:16 am

    Please provide information on how to join in any Class Action lawsuits since we feel we were scammed and therefore refuse to allow these crooks to swindle any more money from us. However this has negatively affected our credit history;adding fuel to the fire.

  5. Nancy Blonshine on September 24, 2012 at 11:06 am

    This past Saturday, 9/22/12, my signifant other and I were also sucked into a DB membership. We were not told until attending the presentation that we had to make a decision there and then if we wanted to join, as once we left, we would not be given the chance to return; talk about pressure!!! However, once I started researching comments on the internet, I found that this was not always the case. Some people were told that if they signed up at the presentatiion they would get a discount, but if they returned within a 30 day period, would have to pay full price. Seems to me that DB should have the same policy for all their outlets. During the presentation, we were advised that the way DB made their money was merely by membership fees; however, subsequent to signing the paperwork, we discovered there was an 8% handling fee on all purchases, different shipping costs for each company; could vary froom 15% to who knows how much (that question was not answered). Much against our better judgement, we signed up. We were told we could not use the website, our cards would not arrive for at least 8-10 days, never received our so-called free gift, walked away with a sinking feeling and a very small insignificant catalogue.

    We are seeking the advise of an attorney, and intend to fight this deceptive practice of sales pressure.

  6. Tracy on October 22, 2012 at 12:31 pm

    I just paid my dues and went to the direct buy in wappingers falls , and also found they had closed down. Any information on the lawsuit to get our money returned would be great . Thank You

  7. raul villatoro on November 24, 2012 at 4:55 pm

    I also would like to get my money back I been taken advantage need help pay menber fee and has not purchase any thing from db yet .

  8. dan on January 12, 2013 at 12:55 am

    It is now 2013 and no news on the Class Action against DB? I thought the judge said it was unfair to the consumer, it would seem that when he denied the class action he did DB a favor?

  9. John on January 26, 2013 at 6:27 pm

    They have moved up and are growing in Canada because nobody up there has caught on the nationwide scams in the U.S. I don’t think we are going to any of our money back.

  10. Laurie on February 27, 2013 at 4:51 pm

    We too were among all of you who feel we were misled, now we have simply stopped paying and they keep calling for their money when we told them they closed and we had no idea, not that it was easy to purchase anything from them anyway. We were told by the creditor that Direct Buy got there money now you’re paying us…whatever!!

  11. Pamela Reynolds on March 2, 2013 at 12:31 pm

    I fell for the Direct Buy scam 6 years ago. I too would like to know if I can get in on the class action suit?

  12. D Bell on March 19, 2013 at 4:07 pm

    I was also mislead, decieved and lied to from this company. I would love to start or join a class action lawsuit!!

  13. Geri Selman on April 6, 2013 at 12:22 pm

    My husband and I also fell in October 2006. I would also love to get in on a class action suit. I purchased a toaster and nothing more (great 5K toaster) because it is hard to purchase.

  14. William B Bensler on April 15, 2013 at 9:05 am

    I bought into Direct Buy and two days later I canceled. They refused to return our deposit. And they started collection on me.
    I wish to join the Class Action.
    I live in NC and joined in SC.
    Can you help me?

    • Karen hambrecht on April 16, 2013 at 1:53 pm

      Also I’m reading about a 200.00 dollar remittance fee to continue our membership when I was charged 2000.00 to renew. Did that happen to anyone else

  15. Karen hambrecht on April 16, 2013 at 1:20 pm

    Does anyone know what the decision means on the paper work I just received on the class action lawsuit. I don t belong to the club anymore because I was billed for 2000.00 after I was told it was a lifelong contract and didn’t pay. They lied to us and we didn’t think to read the contract that said it was over after 10 years. Our purchases always came in wrong and the sales people were very much uninterested in helping us once we were members. Did anyone else get the decision. It says if I buy something for 20.00 all I have to pay is 10.00. How is that fair since I don’t belong to the club anymore, if that’s what it means. Can anyone explain it

  16. Vicki L Snead on January 20, 2014 at 7:34 pm

    I too was told we could never join again if we didn’t do it that night. It was high pressure sales and we were taken up by them. We are still paying and the cost is more than we will ever make bake. The cost was over $4,000. I was caught in the moment and now it is causing stress in our marriage. I need help. I am 65 and on a limited income and our savings is going to direc

  17. Walter L. & Connie J Wallace on July 30, 2014 at 11:56 am

    I wanted to join but my wife didn’t they told that both of us had to agree and we had to join that day. So we joined it cost us $500.00 down they would finance the balance of $5000.00 We were Mislead, we thought we could buy material from them at a lower cost. You have to use their contractor to buy material. we’re in our 70 on a fixed income we would like get the money back and the finance company back they’s. Thank you

  18. victor martin on April 7, 2016 at 1:00 pm

    My wife and i had the same experiences as other consummers. we were told that we were i day early on trying to get work done on our 2007 Cadillac. They also said it was a pre existing condition. This was over a year ago. We recently took our car in for a gear shift problem, when Motor City tried to contact them we were told they were out of business. i had to spend over 1,000.00 to repair it. This is in addition to spending 300.00 on a car rental plus the 1,350.00 for the warranty. All told i am out 2.650.00. How do i recover part of this lost money.

  19. Tracey Nosal on March 10, 2017 at 11:48 am

    I would like to be included in any class action suit against DIRECT BUY…

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