NEW YORK (AP) — DirectBuy will pay a $500,000 settlement in an agreement with the state of New York, which accused the company of bilking people out of thousands of dollars in fees and falsely promising them hefty discounts on goods, the state's attorney general said Thursday.
The direct buying club agreed to issue refunds to New York consumers for memberships and financing fees, while also paying other penalties, New York Attorney General Eric Schneiderman said.
"DirectBuy lured consumers into expensive memberships by promising exclusive member-only deals with substantial savings over retail prices," Schneiderman said. "This company failed to deliver on its promises by taking advantage of consumers who were looking to save hard-earned money."
The Indiana company did not immediately respond to requests for comment.
New York's legal action, which was one of many taken by states across the country, said that DirectBuy charged consumers thousands of dollars in membership fees and promised them exclusive deals on items ranging from furniture to appliances and home goods.
In addition, the company lured in new members by inviting them to open houses featuring free gifts and discounted memberships, but when consumers arrived they were either told that the gifts were not available or free and were pressured into signing up for full-priced memberships immediately, Schneiderman said.