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Attorney Generals Oppose DirectBuy Class Action Settlement

 

By Kimberly Mirando


DirectBuyDirectBuy has reached a preliminary class action lawsuit settlement for allegedly deceiving consumers into purchasing memberships that cost $4,000 or more under the false pretense that they are able to buy items at “direct” manufacturer prices. However, a group of 39 state attorney generals filed an objection this week to the proposed settlement because they say does not adequately protect consumers.

 

The DirectBuy class action lawsuit accuses DirectBuy, which claims to sell home improvement items and furnishings at a “direct insider” price through a paid membership, of fraudulent misrepresentation by implying that its paid memberships would entitle customers to purchase goods from manufacturers and suppliers at actual cost. However, the class action alleges DirectBuy received kickbacks and incentives from suppliers and manufacturers of goods purchased by DirectBuy members, which actually inflated the cost of the goods. This arrangement was not disclosed to customers until early 2009.

 

The proposed DirectBuy class action settlement would give current members a 28-month DirectBuy membership renewal for the price of 24 months, or a 13-month renewal for the price of 12 months. Former members would be eligible to receive a 2-month free membership at their most recent membership level.

 

Thirty-nine attorney generals filed an objection to the proposed class action settlement, however, saying the so-called fee and reduced-price memberships offered are not fair, reasonable and adequate settlements for most of the customers harmed.

 

“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,” said Connecticut Attorney General George Jepsen. “Standing alone, the memberships have little value.”

 

The attorney generals also oppose the fact that the proposed settlement would not prohibit similar future conduct by DirectBuy.

 

A fairness hearing on the proposed DirectBuy class action lawsuit settlement is scheduled for May. The case is titled Christopher Wilson et al. v. Direct Buy, Inc. et al., Case No. 3:09-CV-00590 (JCH), United States Court, District of Connecticut.

 

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Updated April 16th, 2011

 

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3 Comments

  • Kevin McHugh January 28, 2013

    Please keep me advised of the outcome.

  • Angella Petgrave April 21, 2013

    angella

  • Angella Petgrave April 21, 2013

    infomation

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