The Connecticut attorney general says he opposes a proposed settlement involving a retail purchasing cooperative because it fails to deliver any real benefit to consumers.
Attorney General George Jepsen says he agrees with his counterparts in 35 other states, the District of Columbia and Puerto Rico that the settlement involving DirectBuy Inc. and its affililates is toothless.
The class-action lawsuit accused DirectBuy and the co-defendants of fraudulent misrepresentation because the company implied that paid memberships would entitle customers to purchase goods from manufacturers and suppliers at actual cost.
However, according to the suit, DirectBuy allegedly received kickbacks and incentives from suppliers and manufacturers of goods purchased by DirectBuy members, which inflated the cost of the goods. The lawsuit alleges that DirectBuy did not disclose this arrangement to customers until early 2009.
The pending lawsuit also names United Consumers Club, Inc. and DirectBuy Holdings Inc. as defendants. Jepsen took issue with the proposed settlement in a 36-page “friend of the court” brief filed in Connecticut federal court.
A hearing on the proposed settlement is scheduled for May.
