Direct Buy - Scam?
 

OK, we're thinking of building a retirement house next year, so we went to a Direct Buy presentation earlier in the month. Had to book ahead and they were expecting us. Lots of activity in the storefront with people all over looking through catalogues and sitting behind computers. Most seemed to be customers.

Presentation was slick, actually too slick, like it had been done a million times. They always mentioned the precentage off from retail prices but in the short time we were there, comparision shopping was very difficult. Then the final crunch, $5200 up front for three years and all this could be ours. If we turned them down then and there, we never would have the chance to join again.

Anyway, we left without joining. We got free coffee out of it anyway.

So, did we make a mistake or is this really a scam?

Tim

Another Tim had a similar experience: http://forums.pelicanparts.com/showthread.php?t=402948&highlight=Direct+buy

Maybe not a scam, but a ripoff. You have to buy a LOT of their "highly discounted" stuff to get back your $5k. A guy I know joined, and was bragging about how cheap he could buy a TV for. I kept my mouth shut, but the prices he quoted were more than the TV I had just bought off of New Egg. It's more slick marketing and promotion than substance.

Any time I have to make an immediate decision, the decision is "no".

If it was truely a good deal, they would welcome your membership anytime. Why do you suppose they don't want to give you a chance to think about it?

One of the red flags for scams is requiring an immediate decision.

+1 Automatic no whenever a "now or never" is presented to me.

Agreed. Forced decision = scam. It truly is that simple.

+1

OMG you have to pay $5k for that?

I figured it was a scam even if it was free!!!

Furniture and cabinets are SOOOOOO easy to rip people off on too. Just go into an Ashley Furniture store and you'll see what i mean.

We Joined, but it was 3K. And I did the math, as we needed to fill a 4 bedroom house with new furniture, and the $3K was paid for with the first $10K in purchases. We eneded up spending about $20K, mostly on FUrniture. The furniture would have cost us a minimum of $40-50K if we had not used Direct Buy.

You definitely have to know the price/payback number.

But here is how the Direct Buy works and makes Money:

Corporate sells "Franchises".

Local stores sell memberships

Locals store keep the operation running, by charging a flat % on each sale to cover expenses (6% here).

Generally, anything with a very high markup is a very good deal through Direct buy:

Furniture (Low end, 40% off retail, high end %75 off retail, but you almost never pay retail. There is still a significant savings on High End Furniture. We did one bedroom for $800 for a complete bedroom set, queensize bed, mattresses, dresser with mirror and 2 end tables with lamps.)
Name brand luggage (75% off)
High End Clothing (yes they sell clothes)
Mall type jewelery (about 10 cents on the dollar)

I would like to hear the brand name of some of the furniture/items they're selling and the price. Mass-produced furniture (particle-board crap) is made by a few manufacturers and re-labeled for the store(s) where it's sold. Ever go to a dozen different "discount" furniture stores and see the same stuff, over and over again?!?

I find it hard to believe this is anything but a "scam" (using that word for the lack of a better term right now).

Read 'em and weep: http://www.infomercialscams.com/scams/direct_buy_scams

http://www.topix.com/forum/business/furniture/TFEBD42LFU81T500C

(This post, from the last URL, is a beaut... :) ):

Casey Hicks
Bolivar, MO
Jun 9, 2007

MY PETITION URL: http://www.ipetitions.com/petition/drb/index....

I went into Direct Buy to a seminar type thing. They gave me the whole spill telling me I will save 40-60% off of merchandise because they get it "straight from the manufacture". They based the whole seminar on making the stores ( like walmart, lowes, home depot, ect) sound like they are marking everything up 40-60%. It all sounded good until they told me there was a high membership fee. I then said no thanks because I wasn't about to pay a big amount of money just to be a member. He kept trying to persuade me to sign up anyways and said " It sounds like a lot of money to join but you will save so much money being a member it will out weigh the cost to join". After about an hour of me refusing and he still was trying to persuade me and finally got me to join. To be honest the only thing that sealed the deal was he told me I could never come back again ( which I hear its after 7 years so he lied). I felt horrible the whole time but he kept munipulating me and reinsuring me I made such a great decision. A few weeks later I went back to the stores hoping to find the great deals everyone promised me. I couldn't find anything much cheaper at all. Some stuff seemed to be cheaper but by the time you add the cost of shipping and handling it was more than the stores. I then sent them a letter telling them how I felt and said I felt conned into signing the contract.(By the way I have a very low income and stressed this to them the whole time. I told them by the time I paid the monthly fee I couldn't afford to buy anything. Once again they fed me lies and reinsured me that the savings are incredible.) They called and were really rude to me and said they said all kinds of stuff they didn't say and denied half the stuff they actually did say. Its just basically the same old story ...I am another person scammed by Direct Buy.





Also read the posts "praising" Direct Buy. If those aren't ringers, I'm Mickey Mouse... :D








...

Scam.

I went online to the User section. There are more Catalogs in the store, than online. But here is what is listed on-line:

This is just from the Catagory "Furniture, Bedrooms"

Aico
Alf UNO S.P.A. www.alf.it
Allure/A.P. Industries www.apindustries.com
American Drew www.americandrew.com
Ardley Hall WWW.ardleyhallinc.net
Arts & Crafts Industries www.artsandcraftsindustries.com
Ashley Furniture - Casegoods www.ashleyfurniture.com
August Lotz Co. www.augustlotz.com
Bermex International www.bermex.ca
Bluefish Home, LLC www.bluefishhome.com
Bontempi Casa www.bontempiusa.com
Brownstone, Inc www.brownstonefurniture.com
Cochrane Furniture www.cochrane-furniture.com
Craftique Furniture www.craftiquefurn.com
Crawford Furniture www.crawfordfurniture.com
Cresent Fine Furniture
DeFehr www.palliser.ca
Designmaster
Dinec www.dinec.com
Fairmont Design Company www.fairmontdesigns.com
Fashion Bed Group www.fashionbedgroup.com
Fauld Town & Country Furniture www.fauld.com
Hickory White
Highland Design www.highlanddesign.com
Huppe www.huppe.net
Hurtado USA, Inc. www.hurtadofurniture.com
Intercon Furniture www.intercon-furniture.com
Kincaid www.kincaidfurniture.com
Klaussner www.klaussnerfurniture.com
Lane www.lanefurniture.com
Lane Venture/Excursions www.laneventure.com
Largo International, Inc. www.largoint.com
Laurier www.laurierfurniture.com
Leda Furniture Ltd. www.ledafurniture.com
Legacy Classic Furniture www.legacyclassic.com
Lexington Furniture www.lexington.com
Liberty Furniture Industries
Maestro Collection by Kincaid www.kincaid.ca
McKay Custom Products
Modus Furniture International www.modusfurniture.com
Najarian Furniture Co., Inc. www.najarianfurniture.com
Oakwood Interiors www.oakwoodinteriors.com
Ohio Table Pad www.otpc.com
Old Biscayne Designs www.oldbiscaynedesigns.com
Old Hickory Furniture www.oldhickory.com
Progressive Furniture www.progressivefurniture.com
Pulaski Furniture www.pulaskifurniture.com
Rare Collections/Sansegal Home Designs www.sansegalchina.com
Riverside Furniture - Casegoods www.riverside-furniture.com
Rossetto USA, Inc. www.rossettousa.com
Samuel Lawrence Furniture-SLF www.slf-co.com
Shadow Mountain Inc.
Sitcom
Sleep Master
Stanley Furniture www.stanleyfurniture.com
Star International
Statton Furniture www.statton.com
Sumter Cabinet Company
Vaughan - Bassett
Vaughan Furniture Co. www.vaughanfurniture.com
Wallbeds www.wallbedsinfo.com
Wynwood Furniture /DMI www.wynwoodfurniture.com
Zocalo www.zocalousa.com

MAYBE in a situation like Red Beard's it would make sense. For the average guy that maybe needs a couch or TV, no way. Of course, there's a number of ways to pay less than retail without dropping $5k. It's easy to get a salesperson to knock 25% or more off of furniture in just about any store, and electronics are almost always cheaper online. What really bugged me was how they advertise this grand "showroom", but then you have to order everything out of a catalog.

"Marketing" is simply a euphemism for "convincing people to spend money on something they otherwise wouldn't".

Apply the simplest, most basic logic - "when is an offer made to you ever in YOUR best interest?" (answer = "virtually never")

As a general rule, I avoid anyone who's trying to solicit me. By contrast, if I want something - I research it, find out what it is I'm looking for exactly and then go get it. Anyone trying to sell to me is inherently at a huge disadvantage. I don't trust people by nature.

Matt, that is basically what I think is the problem. People have the wrong impression of the company. If you're going to be dropping $20K on furniture, it makes sense. If you are not, you will not make up the cost of the membership. Pretty simple.

We didn't buy everything there. No oriental rugs (those are individual items). Electronics are NOT a deal. They do not have every brand.

High pressure sales hype doesn't affect me. I did the math and it made sense for us. I've talked to several people at work about it, and again made the point you need to be spending $20K or more to make it work.

If you are buying furniture from Ashley, or Star (Berkshire Hathaway!) or any other regular furniture store, understand that the retail price has a 60-75% margin built in. This is why they are always "On sale" or willing to deal down.

It's funny, we've covered our membership, and the things we buy now seem very cheap. Mall Jewelery for family and friends? I love seeing that I'm paying 10% of the retail price. Yes mall jewelery retail price has a 10x markup from cost.

So how much will you "really" save if you joined. On low end furniture, I expect the savings is 20% off, after all the fees and shipping, on what you'd really pay at a normal furniture store. On the higher end lines, it really is closer to 50% off what you would actually pay at a normal furniture store.

+1

My wife never pays retail.

Last house we furnished we used a broker in NC.

My wife went shopping local in NY, found stuff she liked, figured out who the manufacturer was and the model, sent it to the broker and a couple of weeks later the exact stuff would show up and we paid on average 50% of retail including the brokers cut and shipping.

You can save $"s yourself if you are willing to do some work.

Half the fun of it was trying to get the man/model info. Turned furniture shopping into a "mission".

Their sales pitch reminds me of the 80's with the boom of the "lake lots" and the "time shares" wanting you to decide then and there, and no chance of doing it at a later time. Just a new spin on an old sales tactic.

Alberta and Arizona both begin and end in "a"s, but the similarity ends there. Todays weather here is sunny and high of 72F. Weather in Phoenix is sunny and high of 450F.

Actually my son and his family live there, but never (well, except for short periods) me.

Tim

Thanks for an informative post. There is a DB right near me and I walked in one day. To tell me that I have to make an appointment to "walk in" tips the scales for me. Now, because of this thread, I know what they were setting me up for. Had they hooked me and got me to the "presentation," I probably would have been so angry they might have needed to call the police.

I don't go the free meetings. Hell, I don't go to paid seminars. If I want advice, I'll find a non profit or something like the SCORE part of the SBA.