CHARLESTON – Attorney General Darrell McGraw has filed a suit against DirectBuy over its high-pressure sales practices.
Assistant Attorney General Matthew Stonestreet said Wednesday that Indiana-based DirectBuy Inc., the local franchise DirectBuy of Charleston-Huntington and its President Timothy Parker were named as defendants in the Kanawha Circuit Court case regarding unlawful, coercive, deceptive, and high-pressure sales practices.
Soon after the local DirectBuy opened in 2009 in Cross Lanes, McGraw's office began receiving complaints from consumers that the discount buying club "pressured them into purchasing memberships costing thousands of dollars."
A release from the AG's office says DirectBuy coerced consumers by offering free trial offers, guaranteeing free gifts, and offering a variety of other promotions.
"When consumers attempted to redeem these offers, they discovered the offers were not available as promised," the release says, "Instead, DirectBuy focused on selling expensive club memberships through a sophisticated and oppressive sales presentation."
McGraw's office says DirectBuy solicitations encourage consumers to contact the company to get a "free visitor's pass" to its showroom. Then, they are invited to a sales presentation at the store. After obtaining the consumers' personal information, each consumer is paired with a salesperson.
During this one-on-one sales presentation, DirectBuy "pressures consumers with its 'now or never' tactic, according to McGraw's office.
"DirectBuy warns consumers that anyone who leaves the premises without joining the club will be banned from joining forever," the release says. "This threat is false, misleading, and unconscionable. When consumers become members, they discover that many of the promises DirectBuy makes during the sales presentation directly contradict the actual terms of the membership agreement."
"Some of the elements of their sales practices are common nationwide," Stonestreet said Wednesday. "Some, we found, are distinct to this location.
"The 'now-or-never' tactic, from our investigation, is used in most of their locations. People walk in and they're not really sure what's going on. Then this is dropped on them. You have to make this decision right now. The consumer is bombarded with these high-pressure tactics."
Despite guarantees otherwise, DirectBuy's written contract "specifically prohibits refunds, discloses various hidden fees, and plainly states that 'DirectBuy does not guarantee that members will get the best price,'" the AG's release says. "DirectBuy discloses these material terms only after the consumer has purchased and signed the membership agreement."
Stonestreet said McGraw's office began an investigation after receiving several complaints from consumers.
"West Virginians should not be pressured with coercive, deceptive, and unlawful tactics into buying expensive club memberships that have little actual value," said McGraw.
In the complaint, McGraw's office seeks a preliminary injunction barring DirectBuy from engaging in such activity in West Virginia until further order. The complaint also asks that the court eventually order restitution, refunds, debt cancellation and civil penalties.
Stonestreet said the AG's office in Ohio has an assurance of discontinuance with DirectBuy, meaning they reached an agreement saying the company will change some practices.
Stonestreet and Christopher Hedges are handling the case for McGraw's office. The case has been assigned to Circuit Judge Jennifer Bailey.
Kanawha Circuit Court case number: 11-C-140