The sneaky ways of DirectBuy
Peggy Nugent wasn’t sure what to make of an offer that arrived recently in the mail.
“Congratulations!” it said in big letters. Nugent, of Manhattan Beach, had been selected to receive a three-day vacation in San Diego, including free hotel accommodations, two tickets to SeaWorld and a $100 restaurant coupon.
The notice included what looked like a check — but wasn’t — bearing the logo of SeaWorld Parks & Entertainment.
What caught Nugent’s eye was the fine print on the back. It said that “this promotion is sponsored by and is not affiliated with, nor an agent of SeaWorld Parks & Entertainment.” Was there a “not” missing before the word “sponsored”?
“Typo or sleight of hand?” Nugent asked me.
Good question. And what was really going on here?
I called the number on the notice and reached Ted in the “promotions department.” When I asked whether I was speaking with SeaWorld, he said that, no, I had reached DirectBuy of Long Beach.
Ted explained that DirectBuy is a nationwide home furnishings club, providing members with discounts on everything from furniture to fixtures.
Recipients of the company’s mailers, he said, are eligible to receive that San Diego vacation if they attend a 90-minute open house for club membership.
OK, I’ve seen things like this before, usually for time shares or travel clubs. You receive a notice from what looks like an airline promising two free tickets to somewhere, but first you have to listen to a sales pitch.
In October, American Airlines filed a lawsuit over postcards bearing its logo for an unaffiliated vacation club. “The promised airline tickets are either not distributed at all or are very difficult to redeem because of the many fees and restrictions they carry,” American said.
Home furnishings seemed like a new wrinkle, but with the same basic business model.
For instance, Ted said I could pay nearly $6,000 for a three-year DirectBuy “gold” membership, which would entitle me to buy furniture “at the same prices that the retailers pay.” The membership fee for each additional year would be $200.
Ted said that members can choose from about 800 brands, but he declined to name a single one. He sent me a DirectBuy catalog that had all the brands obscured in photos or possibly Photoshopped out.
I asked where I’d be staying during my free San Diego holiday — which, Ted revealed, would actually entail my paying taxes and fees.
“Oh,” he answered, “the Wyndham, the Crowne Plaza or many others.”
The Wyndham and the Crowne Plaza hotels in San Diego are pretty nice. DirectBuy must have cut a slick deal with these places to be able to hand out free rooms to anyone who sits through a 90-minute sales talk.
But when I spoke with the general manager of the Crowne Plaza, he said he’d never heard of DirectBuy. Staffers in the sales department at the Wyndham also scratched their heads over why the name of their establishment was being tossed around by a home-furnishings club.
As for SeaWorld, the theme park said it’s considering legal action.
“SeaWorld is not connected with this promotion,” said David Koontz, a spokesman for the company. “We are currently looking into the matter, as we take our brand and our trademarks very seriously.”
DirectBuy is based in Indiana, and it franchises operations nationwide. In 2007, Consumer Reports said its investigators found that DirectBuy’s contract makes clear that “you cannot return items, cancel orders or terminate your membership.”
Club members must pay a 6% handling fee, shipping fees and tax, Consumer Reports said. Prices for electronics and appliances, it said, “were often only slightly better than those at online retailers and, in some instances, higher.”
At the time of the Consumer Reports investigation, a three-year DirectBuy membership cost about $5,000. “Even if you were to save 25% on purchases after joining, you’d need to spend more than $20,000 just to recoup your membership fee,” it said.
In January, New York Atty. Gen. Eric T. Schneiderman announced a $500,000 settlement with DirectBuy over “misleading and deceptive sales practices.”
Consumers were lured to DirectBuy open houses with promises of gifts and prizes, the attorney general’s office said.
“Once at the open house, however, prospective members found that advertised gifts were neither available nor free, and instead they were met with a sales pitch pressuring them into purchasing full-priced memberships immediately or forever lose the opportunity to become a member,” it said.
Mike Georgeff, a senior official at DirectBuy’s Indiana headquarters, told me that franchisees are supposed to clear all marketing materials with the head office before sending them out.
“We have reviewed the direct-mail piece in question and determined that it did not go through our direct-mail compliance protocol, is in violation of our ad policy and was not approved by our corporate marketing team,” he said.
Georgeff said DirectBuy was in touch with its Long Beach franchise owner “to address the issue and ensure this type of situation doesn’t occur in the future.”
No one at DirectBuy of Long Beach returned my calls for comment.
So in answer to Nugent’s question — “typo or sleight of hand?” — I’d say it’s one and the same. If it’s a typo, it’s a darned convenient one. If it’s a little corporate chicanery, well, judging from what the New York attorney general had to say, it may not be the first time.
As best as I can tell, a DirectBuy membership might actually save you some money if you’re willing to spend thousands of dollars furnishing your home top to bottom entirely from a catalog.
But if you, like many people, tend to make big purchases in small doses, a $6,000 membership fee probably isn’t worth the money.
And here’s the main thing: Any product or service that’s worth buying shouldn’t require sneakiness to sell it.
If these guys have to trick you into attending a sales meeting, they’re likely not anyone you want to know.
David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.
