Fee dispute involves club where membership is now or never

DirectBuy describes itself as "the leading home improvement and furnishings club that offers merchandise at manufacturer-direct prices without traditional retail markup."

To join, you must attend a showroom tour at an area club (Fort Worth has a franchise on East Loop 820). Then you can look at sample catalogs showing prices on items offered.

If you don't join on the spot (prices are roughly $3,000 and up for various levels), you don't get a chance to join again.

Consumer Reports called the selling sessions "intense."

Antoinette Greco of Bedford planned to renovate her kitchen. In January, she attended a sales session and joined up, paying $3,000.

When she returned three months later to start buying items, she didn't like what she saw.

The price for a file cabinet was the same as at Staples, she said.

A Moen kitchen faucet? Forget it. She had bought a silver membership, and Moen products are sold only to gold members, she was told.

Counter lights? She needed 18-inch lights, but the catalog offered only 22-inch versions.

A KitchenAid refrigerator? Not available for silver members.

Granite? Sorry.

"Therefore, I could not purchase anything," she told me. "I had a contractor ready to begin in late June and had to go elsewhere to purchase the kitchen door knobs, counter lights, granite, stainless steel sink, faucet, etc."

Greco says the salesman didn't tell her that purchasing was limited with a silver membership. She asked for a refund of $2,000, allowing DirectBuy to keep $1,000. The company countered with an offer to upgrade her membership for free.

She declined, saying she had already bought what she needed.

She complained to the Texas attorney general's office, the Federal Trade Commission and the Better Business Bureau.

DirectBuy spokesman Mike Georgeff says the company "made more than reasonable offers to help alleviate her specific concerns. Therefore, pursuant to the terms of the membership agreement, the owners have made a request for BBB arbitration. As a result, we must decline further comment due to the confidential nature of those BBB arbitration proceedings."

The Fort Worth franchise has a strong A-minus rating from the BBB, which reports only seven complaints in the past three years. The attorney general's office says it has 46 active complaints on file about the company's Texas locations.

Fort Worth franchise owners Larry and Mary Albritton, the company spokesman said, "have always maintained a professional environment at their club and are among the most respected owners in our network." DirectBuy has about 160 locations nationwide.

Larry Albritton did not return a phone call from The Watchdog.

In a letter to Greco in June, he apologized and stated that he would upgrade her to a gold membership for free and mail her a quarterly catalog so she didn't have to come in to view it.

"Seldom do our members find prices that are cheaper than our members pricing, when comparing apples to apples," he wrote. "As an added assurance, if you do find an item in retail cheaper, DirectBuy will beat that delivered price by 10 percent. I am not sure what 4-drawer file cabinet you were interested in, but I can assure you of savings."

Julie Baker, a TCU professor of marketing, says she researched the company two years ago when she was doing a kitchen renovation similar to Greco's. She said a membership makes sense if someone is redoing an entire house and plans to buy many items.

"I don't think it is for everybody," she said. Members have to spend a lot of money to recoup their initial investment.

The best way to evaluate, she says, is to research beforehand what you want to buy, so when you take the tour you can compare their prices to prices elsewhere.

She calls the notion of forcing people to join on the spot "a pressure tactic" and adds, "I would be leery of a company that is so aggressive."

DirectBuy says it has to protect its "confidential dealer catalogs" with offerings from "more than 700 top manufacturers."

The company says its 400,000 members order directly from the manufacturer or authorized supplier. Custom orders take longer and must be factored into renovation schedules. Little or no inventory is kept at a DirectBuy facility.

DirectBuy also says a 2008 agreement with the Ohio attorney general gives Ohio residents the right to cancel a membership within three days. (In Texas, consumers can cancel some contracts within three days if the purchase is at a home or rented space, but not at an office location such as a DirectBuy showroom.)

Ohio authorities complained that the sales tactics were high-pressure and that information was not properly disclosed to customers. A three-day cancellation period allows customers to research and compare prices, Ohio authorities said.

In February, 100 people filed a federal lawsuit in Indianapolis accusing the company of pressuring people into memberships and charging markups on products and excessive shipping fees. The lawsuit also alleges that the company does not pass on to members savings received from manufacturers' rebates. The company is defending itself against the allegations.

That lawsuit is on hold, though, while a final settlement on a lawsuit in Connecticut is resolved, said Eric Pavlack, an Indianapolis lawyer representing plaintiffs in the Indiana lawsuit.

Meanwhile, Greco's legal route is more low-key. She hired a lawyer, Crystal Gayden of Bedford, to write a letter giving DirectBuy two weeks to refund the $3,000. DirectBuy wants the case to go to arbitration.

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The Watchdog column appears Fridays and Sundays.

Dave Lieber, 817-685-3830

Twitter @DaveLieber