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Lawsuit Claims Buying Club Took Kickbacks

Team 5 Investigates Reviews New Allegations Against DirectBuy

POSTED: 9:46 am EST November 26, 2008
UPDATED: 6:01 am EST November 27, 2008

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What home remodeler wouldn't want to pay wholesale prices, saving hundreds -- even thousands -- of dollars on a project?

That's the sales pitch for DirectBuy, which has members-only buying clubs throughout the country.

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"It was appealing," said Rhonda Lisio, who paid nearly $4,200 for a membership in 2006. "The thought of saving money and buying directly from the manufacturer."

But she said she found that the club's so-called factory prices weren't the bargain she expected.

"It really didn't add up to a great savings because they were jacking up the first price that they were showing," Lisio said.

Lisio's complaint isn't isolated. Team 5 Investigates obtained a copy of a recently filed class action lawsuit that claims DirectBuy members actually paid more than the wholesale prices they were promised.

In the suit filed in federal court in Connecticut, DirectBuy is accused of making "false" and "misleading" representations about consumer savings because "unbeknownst to Class Members, Defendants receive tens of millions of dollars in 'kickbacks' from manufacturers and suppliers out of the purchase prices paid for products by DirectBuy members, thereby resulting in Class Members paying more than the direct price."

The suit claims there are thousands of dissatisfied DirectBuy members.

DirectBuy told Team 5 Investigates the suit is "misguided." They denied all accusations, saying the company never "received any illegal or improper 'kickback' of any kind."

Last year, Team 5 Investigates went undercover after receiving complaints about DirectBuy's high pressure sales tactics. Team 5 discovered people were forced to decide whether to pay several thousands of dollars to join on the spot or be banned for seven years.

After months of fighting DirectBuy, Lisio said she finally got a full refund.

"I've done much better with shopping around retail stores and finding things on clearance," she said. "And I saved a lot more than I ever would have with DirectBuy."

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