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Daughters vent their frustrations
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Sweepstakes industry hits unlucky
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Psychology lures people into buying
Sweepstakes victim getting her
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Sweepstakes legislation may carry
local victim's name
Buying club complaints piling up
Here's the key: Think, call BBB
before you sign
NEWS-SUN, EVENING STAR
& HERALD-
REPUBLICAN
|
Buying club complaints
piling up.
Originally printed in The News-Sun,
The Evening Star & Herald-Republican 10/21/01
BY CINDY BEVINGTON
A Fort Wayne business that uses the lure of winning a free car
to get people to listen to a sales pitch to join a buying club
has dozens of complaints filed against it, locally and at the
state level.
Midwest Direct, Inc., which opened in April, 2000, uses telephone
calls and direct mailings to promote its club. According to people
who have received the offers, the company telephones potential
clients, tells them they might have won a car and asks them if
they are interested in receiving a key in the mail that possibly
could unlock the winning car.
Callers also tell potential consumers that, if they bring the
key in, they are expected to listen to a sales pitch for the
buying club. Purchasing items such as carpet, windows, appliances
and furniture through the club can give consumers varying savings
over retail cost, according to Midwest Direct.
Club membership costs $1,999. People can pay the entire amount
immediately or make a down payment and pay monthly through credit
card charges or direct withdrawals from their checking accounts.
In the 18 months since Midwest opened, the Fort Wayne Better
Business Bureau has registered more than 80 complaints about
the company's sales tactics and other issues. Indiana Attorney
General Steve Carter's office has 40 complaints on-hand.
While a Hamilton couple who contacted the BBB were not successful
in getting any money back from Midwest, the company did agree
to cancel the couple's membership in the club after they complained
that the company failed to deliver what it promised. Midwest
Direct also agreed to stop withdrawing payments from the couple's
checking account.
"We received a phone call from Midwest about a year ago,"
said Doris Brown. "They said I was chosen to get a key for
a car in Fort Wayne, and that when I got the key I would have
just so long to come in. I said OK, and I called immediately
when I got the key.
"They said there was nothing to buy, all I had to do was
listen to a program. So, my daughter and husband went with me.
When we got there they kept talking and showing us all these
different things about easing out the middle man (when you buy
things) and that Midwest goes directly to the manufacturer to
save you money.
"It makes you think, yes, I could really save a lot of money
on that."
The Browns signed the contract and made a $200 deposit on the
membership, with the remainder to be taken out of their checking
account monthly. However, when they tried to buy things through
the club, they encountered problems: often they were told the
merchandise was not available or had been discontinued.
In at least one instance where the merchandise was available
- a DVD player - the cost was more than what local department
stores charge.
"There were other things we were dissatisfied on, too,"
Brown said. "Then we saw something on our local TV station
about this company and we called the BBB and filed a complaint."
Three weeks later Midwest offered to cancel the couple's membership.
Another area woman who feels she was misled by Midwest's sales
pitch recently, and who doesn't want her name used, is going
to the BBB with her complaints this week.
She had no idea that dozens of people had filed complaints with
the BBB before she signed the contract, she said, and if she
had she wouldn't have fallen for the club sales pitch.
"My first contact was a phone call where they said there
was a new business in town, where you could buy direct from the
manufacturers," the woman said. "They told me you could
get savings up to 90 percent off, and was I interested. I said
yes and then I got the key in the mail."
The woman didn't realize the key and the telephone call were
related until she "kind of figured it out" as she sat
through the sales pitch, she said.
"First they talked about leather jackets and pots and pans
and how you could get 90 percent off name brands," she said.
"Then they went on to things like lawn mowers and windows.
It sounded like a good deal so I signed up for it."
This woman agreed to make payments through her credit card. She
signed a contract, she said, but refused to initial parts of
it. She alleges that Midwest filled in her initials for her,
without her permission.
She expected to get to browse a warehouse filled with merchandise
after signing the contract, she said, but was instead led outside
the building. Now, she says, she doesn't believe the company's
building is large enough to house all the merchandise Midwest
offers, anyway.
"And what I found is, in my membership guide, the things
they told me I could save a lot of money on have little or no
savings at all," the woman said. She added that she feels
she was high-pressured into purchasing the membership, and misled
on what the company has to offer.
Coincidentally, the woman added, as she was leaving the building
she encountered a picketer who was trying to get people not to
go in, saying Midwest's sales pitches were misleading. She did
not get the man's name.
Midwest Direct's vice president of general operations, Brian
Bunnell, denies that Midwest uses high pressure sales tactics.
He also says his company tells people up-front in what ways the
company can or cannot save people money.
He said the company has mailed approximately 30,000 to 40,000
keys to potential clients since Midwest Direct opened. One winning
key is mailed out for every 10,000 mailings, Bunnell said.
The company has given away one car. The reason more cars haven't
been given out, Bunnell said, is because not everybody brings
in their keys.
Other prizes Midwest Direct gives away include cash, a camcorder
and a "family holiday vacation" of three days and two
nights at a resort of the winner's choice. The vacation is valued
at $175. The company mails out 9,954 winning vacation numbers
with every 10,000 mailings.
People who take advantage of the vacation must make a $50 "refundable"
deposit. If they decide to change the reservation, they are charged
$15. If they don't show up, they lose the $50.
Once they get to the vacation destination, winners are required
to listen to a time-share sales pitch, Bunnell said.
While the prize vacation is advertised as free, literature that
comes with it states children cost $5 each. Also, winners must
pay their own travel expenses to the selected resorts, some of
which are as far away as Nevada and Florida.
Rules for using the vacation also state that winners must travel
at least 100 miles from their homes to take advantage of the
prize.
Tiny print on an inside fold of the vacation brochure says the
hotel names - such as Ramada, Sheraton, Radisson and Holiday
Inn - are used only as "examples of hotels" used by
the vacation plan.
Bunnell countered that the rooms offered in this package are
in suites in fine hotels - even though one part of the vacation
pamphlet indicates that motels sometimes are used.
Charging children $5 each for a "free" family vacation
simply is an "argument of words on how you define family,"
Bunnell said.
He defended his company's sales practices: Everybody who buys
into the club signs a contract saying they were not pressured
into purchasing the plan, he said. He also said that, although
the company admits they can't offer savings for everything a
consumer would want to purchase, "If you want good quality
merchandise and good quality things, we can save you money -
it's all variable."
He also said the company had settled all complaints with the
BBB and, considering the thousands of people the company works
with, the number at the BBB and the attorney general's are not
that great.
"We're in a people business," Bunnell said. "We'll
never be able to please everybody. But our guarantees are pretty
solid. Thirty or 35 of those complaints, they never actually
joined the club. They were mad they didn't get the car or the
cash."
Coil said the BBB "talks a lot about Midwest Direct."
In fact, a BBB employee actually attended one of Midwest Direct's
presentations.
"It was high-pressured and offering a lot of things and
discounts, that had they been able to deliver, would be worth
the money invested," Coil said.
"However, our information is that people do not receive
the discounts. A lot of people said (the sales pitch) was high-pressured
and misleading."
The contracts people sign with Midwest Direct are valid and binding,
Coil added. "Unfortunately, what happens is people sign
that contract and later want out of it, and there's nothing left
for us at the BBB to do. We can send Midwest the complaint a
consumer files, but Midwest's response always is, 'They've signed
a valid contract' - and they have.
"So, until someone files some sort of lawsuit, Midwest will
continue to get away with it."
Coil encouraged people with complaints about Midwest Direct or
any business to contact the BBB (1-800-552-4631) or the attorney
general's office (1-800-382-5516 or www.IN.gov/attorneygeneral/complaint). He
also explained that, unlike the attorney general, the BBB does
not have the power to bring suit against a company.
To protect themselves, Coil urged people to think before they
sign anything, give themselves a day or so to decide whether
they want to buy something, and call the BBB before signing a
contract to see if a particular company has any complaints against
it.
"It's sad but once people give out money and sign a contract,
they're stuck," Coil said. "In this instance, hopefully
the attorney general can do something."
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STAR REPORTER'S
SWEEPSTAKES SERIES WINS NATIONAL AWARD
EXCLUSIVE TO THIS WEB SITE:
A letter to The Evening Star editor
from Indiana's Attorney General
Want to read another paper's stories
about sweepstake scams?
Why do the elderly seem more susceptible
to believing sweepstakes promises? Two experts give their opinions
Why do the elderly seem more susceptible
to believing sweepstakes promises? A gerontologist shares his
studies.
Iowa has seen it before
National issue, local example,
big news
Persons to contact if you believe you may be the victim
of a sweepstakes scam:
National Association of Attorneys
General
750 First Street, NE, Suite 1100
Washington, DC 20002
PH: (202) 326-6000
FAX: (202) 408-7014
Office of Attorney
General
Steve Carter
402 W. Washington St.
Fifth Floor
Indianapolis, IN 46204
PH: (317) 232-6201
FAX: (317) 232-7979
National Fraud Information Center 1-800-876-7060
National
Consumer's League
1-202-835-3323
Federal Trade Commission 1-877-382-4357
(toll free)
E-mail
Cindy Bevington
or Evening Star
editor Dave Kurtz.
WATCH FOR ADDITIONAL STORIES EXCLUSIVE TO THIS WEB SITE!
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