general news

That was fast – I was on TV!

I didn’t get an email warning me that it was going to air, but I had set my Tivo to record the Channel 9 News just in case. Turns out that was a smart move… As I scanned through the 5:30 broadcast last night I didn’t see any mention of my interview. But at the very end of his piece, John Matarese mentioned he would be talking about buying factory direct on the 11:00 News. So, I told Tivo to grab that too. Sure enough, I was on the air. I ripped the segment and posted it onto youtube. I’ve now used up a whopping total of 1 minute and 49 seconds of my allotted 15 minutes of fame. Only 13 minutes, 11 seconds left.

general news

a new scam – American Direct, Inc.

We are slowly realizing all of the perks that come with living in a working-class neighborhood. While I don’t think the whole Universal Promotions/Travel Universal thing was tied to our zip code (I think I did actually fill something out online), we were contacted a few months back about a new promotion a company was having. The company is called American Direct, Inc. and they told me they were just opening their store in Fairfield and were having a promotion that included a drawing for a new truck or $10,000 cash. I thought that was kind of interesting, but wary of scams after our earlier experience, I didn’t really pay them much attention. They said they were going to ship me a key to try out in the truck and I’ll I’d have to do is show up at one of their appointments to test my key to see if I had won. I said I’d call them to set one up and promptly forgot about it. When the key came I threw it away.

Well, this past Monday I got a call back from the people at American Direct. This time the person’s name was LeAnn (probably not her real name). She said they were “sweetening” the deal to encourage the remaining few people who had keys to come by: they’d give me a $500 shopping spree just for showing up. I asked if they had an appointment in the evening so it wouldn’t really disrupt our work and stuff and they said yes, so I set up an appointment Thursday night at 6:30. They wouldn’t tell me anything about their company and when I asked if they had a website they said it wasn’t accessible unless you had the password. All of these things were making me wary, but I figured I could avoid giving them anything but my time and was determined to simply walk out if there was a problem.

So, along came Thursday night and Debi and I made our way to 325 Commercial Drive in Fairfield, OH. The building is located in a business park. It was a single-storied, stripmall style building where you’d expect to find a scam. As we walked in, our fears were confirmed. The place had clearly been in business for quite a while, which means I had already uncovered their first lie – this was not a grand opening and was not some special promotion. This is how they lure in the unsuspecting and prey on them. We arrived a little late and they were already taking all of the unwitting participants into the back room to try their key in the truck. Since I had to get another copy of my key (I threw the original away), I had to register and stayed behind for a few minutes. While one of the receptionists logged me in, I pulled out my phone and tried to secretively snap a few photos. When we got our phones I didn’t think I’d ever use the photo feature, but I occasionally find it very useful. I snapped these two photos before I went back to the “special rooms”:

american direct

The first one is just a sample of the wall decorations. They had these all over the walls in the front room. Seriously, there must have been 200 of them or so. Poor Roy Sipe… He actually looks happy. I think the U.S. flag in the background is a good touch; I’m sure it has great appeal for the demographic they target.

american direct2

This second one was the real kicker. In case you can’t read it very well it says, “Due to the confidential nature of our business ALL RECORDING OR PHOTOGRAPHIC DEVICES ARE PROHIBITED in this building.” Any honest company would not have this type of sign posted, unless they are literally trying to protect trade secrets (e.g., the Toyota plant my father-in-law visited in Japan didn’t allow photography of the factory floor). Clearly American Direct, Incorporated has something to hide – their dishonest business practices.

Once I had finished “registering,” I walked back to where all the other victims of the scam were and caught up to Debi, who whispered under her breath, “Look at the demographics here.” I hadn’t had time to do that until now and when I did, it was telling. There were a total of 18 “marks” or victims, and of those, all but two were working class – Debi and I. There were a lot of old, deteriorating t-shirts; lots of hairsprayed and oily, stringy hair; stained jeans; and a lot of poorly behaved children. Don’t get me wrong, they are all nice people; we talked to a bunch of them and they were very kind. But you could tell they weren’t coming down from West Chester or stopping by from Wyoming or Hyde Park. These are the type of people who live in our condominium complex – blue collar, working class. I don’t claim to be wealthy – au contrair, I’m a poor graduate student and probably make a lot less than a lot of the people who were there. But there was a clear educational difference, which I’ll touch on a bit more later.

Anyway, we all tried our key in the truck to no avail. No one won the truck or cash. We were then herded like mindless, unwitting sheep into the “sales pitch” room. Our salesperson, an African American, former military guy I’ll call “Asswipe” (’cause I forgot his name) was telling jokes and working his angles the whole time. Once we were all settled, he started in on his pitch. I have to admit the person who called me didn’t say how long this would take, but I was hoping it wouldn’t be very long as I had other things I wanted to do that night. Well, I’m beginning to realize that length of time is an important factor in these scams. Rather than jump right into how much money they want to take from you, they start by “building relationships of trust”. Asswipe pretended to teach us all about how we were mistreated by retailers like Sam’s Club and Wal-Mart (again, think demographics here). He talked about how much they mark-up the merchandise they sell to us. I particularly enjoyed his discussion of Sam Walton’s personal wealth and his claim that it came directly from his marking up of products, which was one of the first places where I shook my head in disagreement (exploitation, exploitation, exploitation…).

The really scary thing about the presentation was that Asswipe was so ebullient and charismatic that 16 and a 1/2 of the people in the room were really getting into his presentation (Debi did half the time). When he would ask, “Who cares about their money?” Everyone would answer in unison, “We do!” And when he’d ask, “How many people agree with that,” Everyone would raise their hands. For some reason I just couldn’t get into his pitch.

I was, however, quite impressed by the use of manipulative techniques. He spent the first hour or so pretending to educate the people. What better way to build confidence in his marks than to actually make them feel like they are more educated now than when they walked in? Quite a brilliant tactic, actually. I also liked how he directly referred to other, classic scams (e.g., timeshares, Amway, etc) as scams. He mad fun of those other scams and spoke directly to the fears of the marks he had in front of him. He said stuff like, “How many of you, on the way here, were thinking, ‘It doesn’t matter what they say, I’m not buying anything’?” Again, 16 hands went up. He then tried to alleviate their concerns by saying, “This is not a scam.”

So, what is the scam they are trying to pull off at American Direct, Incorporated? They claim they can save you money by helping you buy the merchandise you would by at a retailer direct from the factory, saving the retailer’s markup. One example Asswipe used was Blue Blocker sunglasses (which I had never heard of). He claimed the cost to make them was $0.95. He then said the cheapest you could buy them retail was $9.95 from Sam’s Club and that most places sold them for anywhere from $14.95-$49.95. He used several additional examples, including some cheap ass knives and grandfather clocks, showing the markups on them. In short, he claimed you could save money by affiliating with American Direct, Inc. and buying stuff direct from the factory.

Of course that seems like a good idea. The problem, however, is that nothing is ever that easy. It’s not like the people at American Direct, Inc. are just going to sell you a $5.00 guide to buying factory direct or anything; they have a different goal. I think the goal of American Direct, Inc. is best seen in something Asswipe kept saying. He was really fond of asking, “What are retailers in business to do?” Everyone in the room was smart enough to realize the answer was, “Make money!” But the question Asswipe never asked was, “And what is American Direct, Inc. in business to do?” The response, of course, is, “To make money!”

So, how does American Direct, Inc. profit from “helping” people buying factory direct? There are three clear ways they do. First, they charge a 10% handling charge on everything you purchase from the factory through them. That’s in addition to the shipping you pay for. So, even though they claim to be getting rid of the middleman, in reality they become the middleman. Second, they charge a one-time lifetime membership fee of… get this: $1,999.00. Yep, that’s right, that’s almost $2,000.00. On top of that, and yes this makes no sense, you have to pay an annual renewal fee of $199.00. So, the one-time, lifetime membership fee isn’t the only fee – you have to pay $200 per year to stay a member.

Let me recap:

  • 10% markup on everything you buy (in addition to shipping)
  • $2,000.00 up front to join
  • $200 per year to stay a member

And they claim you’ll save money by joining. Well, let’s think about that… While we were sitting in the “sales” room I saw at least three other sales people walking around, sitting on their thumbs, studying the marks, etc. There were also two secretaries/receptionists up front. That makes for at least 6 employees, if you include asswipe, all who take home paychecks. Hmmm… So, what they really mean with the phrase “saving you money” is “making them money.”

I particularly loved it when he said that they are not in direct competition with retailers. He even said that they don’t want to take all of the retailers’ customers away, which didn’t make any sense to me. If they really had a good deal for people and wanted to help them, they’d want everyone to convert. Truth be told, if too many people find out about this scam, they’d be run out of town. So, they don’t want too many people to know about it. In saying this, Asswipe actually claimed that everyone in Cincinnati was given a chance to participate in the program, but that they only contacted 10% of the population at a given time and that they dialed numbers randomly. Yeah, right. Remember my description of the demographics of the people there?

Oh, and about those demographics… At one point, in talking about the wealth of the Walton family, Asswipe said they were worth about $27 billion. He then asked if anyone knew how much a billion is. Two of the fathers in the room said, and I’m not making this up, “One hundred million?” I’m not sure if I was more shocked or appalled. Asswipe was kind enough to correct them, but I thought that was particularly telling. Asswipe really wanted these people to feel special, thus the, “We only invite 10% of the people around here to participate.” American Direct, Inc. is likely targeting people in lower-income and working class neighborhoods. They probably think they are less likely to see through the program and recognize the scam that it is. And because Debi and I are poor and bought our condo as poor graduate students we fall in the right zip code!

It was pretty clear from the get go that I was going to be the group’s only skeptic. I didn’t buy into the charisma and didn’t answer his questions. I didn’t raise my hand. In fact, I spent most of the time writing notes and doing ethnographic field work. But there were a few points when I had to pipe up and question his bullshit. For instance, he kept insisting that we are “forced” to buy retail. Everyone else agreed and I said, “No.” He said, “What do you mean no. You have to.” I said, “You can make it yourself.” To which he responded, “Yeah, good luck with that.”

Later when he insisted that retailers are a monopoly I had to pipe up again. I said, “No, retailers are not a monopoly and they can’t be due to anti-trust laws in the U.S. What’s more, because they are not a monopoly and compete for our money, that actually drives prices down.” He said, “Look, I took an economics class in college. I know how this stuff works…” I cocked an eyebrow at him as he continued, angrily, “I don’t care if you agree with me or not. The point is, I’m here to help you save money.” He got really angry and intentionally tried to avoid talking to me the rest of the time. His anger boiled over when he asked the people in the room if they thought $199 was too much to spend per year to buy factory direct. Everyone else said no, but I said yes. His response, “You think that’s too much to spend to buy factory direct?” I nodded my head. Then he said, “Then leave. You can leave right now.” I said, “I want to see how much the one time membership fee is.” He responded, “Why? It doesn’t matter to you. You don’t want to pay the $199 so why do you care?” I said, “I just want to see. So, do go on.” I think he was pretty upset, but I really didn’t care.

It was at about this point that the sales pitch ended. They then took us out of the “sales” room, divided us up into individual couples, and brought in “the closers.” I loved they way the closers worked. Rather than ask if we wanted to buy a membership or not – they went straight to, “So, how many memberships do you want, 2 or 4?” What a manipulative scheme. The whole thing is designed to manipulate, pressure, and deceive. It was absolutely appalling! We said we weren’t interested and the guy tried for a while to convince us we should be, but he didn’t get anywhere.

He then said he was sorry we weren’t interested, but that they were going to give us our $500 gift certificate and a travel voucher just for coming. Woohoo! When I got home I checked out the gift certificate and voucher in detail. The gift certificate claims to give you $500 worth of cash on this website: www.KEShoppingSpree.com. Since I didn’t use my code, you can use it to get into the site: KE0293712. KEShoppingSpree.com is another scam site. Yep, they rewarded our attendance at a scam presentation with an invitation to another scam. You can, in fact, buy shit on the website, but they charge you exorbitant shipping and handling fees (e.g., $15.00 to ship you an XBox game). I looked through the site and compared some of the prices to actual retail prices. They have the XBox game “The Hobbit” listed at $49.95 plus $14.95 shipping and handling. You can buy it at Wal-Mart right now for $19.95 and can probably get it used on Half.com for about $8.00. All of the kitsch on the site is set up this way. The price they give is way, way over retail. Then the shipping and handling charge is about what you’d pay retail. In short, the $500 gift certificate is worth a whopping total of $0.00, and is more likely to cost you money than save you money! My favorite part about this is that on the back of the voucher it has directions that tell you to enter the URL directly into your browser and not to use Google to search for it. Guess why? ‘Cause now that I’ve posted that it’s a scam, Google will return my URL too ;).

As for the travel voucher… Remember how they talked about timeshares being a scam? Yeah, well, it’s a travel voucher that goes through a timeshare sales company. You may get 2 nights free in a hotel, but you have to go through a timeshare pitch. What absolute and total assholes! American Direct, Inc. is a scam. And when we didn’t buy their scam, they tried to reward us with two more scams. All told, we threw away 2 hours of our life to American Direct, Incorporated. Assholes!

A couple of things I didn’t mention earlier but are worth touching on:

  • Asswipe claimed he wasn’t a salesman but was a “consumer consultant.” Consumer consultant my ass!
  • Asswipe intentionally exaggerated the differences between factory direct and retail by not including shipping and handling costs, which you’ll pay no matter what; he just reported the manufacturing cost.
  • When Asswipe mentioned the 10% markup fee, he glossed over it as though it wasn’t really anything.
  • Most factories don’t sell directly to consumers because it is too costly for them to manage the shipping, ordering etc. They use distributors. What do you think American Direct, Inc. is? You still don’t buy factory direct, you buy through American Direct, who is just a distributor/retailer.
  • At one point Asswipe said, “There is no catch.” That was before he talked about the one time fee… ;)
  • Asswipe mentioned a lot of well-known manufacturer’s names to make people feel like they would be buying namebrand merchandise. I’d bet my left kidney most of the shit they let you buy through them is kitsch and knockoffs.
  • In a sheet they had us fill out, one of the things listed that you could buy factory direct was, and I’m not making this up, “psychic readings.” Debi and I laughed about that one for about 5 minutes straight. We almost put it down just to see how much money Asswipe thought we could save on it.
  • If everyone who attended that night had paid the fee, that would have been about $20,000 (couples only pay one fee, not two). That’s probably about half the amount they pay one of the sales reps per year…

There’s another important thing to keep in mind here about why this program is a scam. I’m guessing most of the people who pay the fees never buy anything through American Direct, Inc. They get lulled in by the slick sales pitch and the deception, but then realize it was a mistake and go back to shopping like everyone else does – retail or wholesale. Keep in mind that Bill Gates doesn’t shop through American Direct, Inc. He shops retail, just like everyone else.

Anyway, I’ve come to love our zip code. It really brings in the scams. This is my new favorite, replacing the bi-annual Jesus Prayer Rug from St. Matthews’ Churches. Why? Well, it’s clearly marketed towards working class people and it really will bend you over and fuck you long and hard.

A couple lessons learned about scams:

  1. If they claim it is not a scam, it is. Any company that has to try to distance themselves from a scam is a scam.
  2. If they are trying to sell you something and won’t let you take pictures of them trying to sell it to you, it’s a scam.
  3. If the person trying to sell you the scam says they are not a salesperson, they are and it’s a scam.
  4. If they mention other scams or make fun them, it’s a scam.

Update 6/5/2006:

I just realized I should mention this company can also be checked out via the Better Business Bureau of Cincinnati. You can see a report on them here. I’m guessing the low number of complaints is the result of the small number of people who fall for the scam and not that the company is a nice one. Just my two bits, though… Also, if they contact you and you’re on the “Do Not Call” registry for telemarketers, you can actually lodge a complaint against the company with the BBB.

Update 6/20/2006:

John Matarese from Channel 9 interviewed me about my experience. You can see the clip below:

Update 7/13/2006:

Amazingly, I just got another call from American Direct, Inc. inviting me to come visit their recently opened store. The call came at 7:25 pm, on 7/13/2006. The number they called from was 1-270-762-9905. The woman on the phone said (and I’m paraphrasing), “Hi. We’ve just recently opened a store in your area and would like to invite you to come visit it. We’ll send you an invitation with a key in it. If you’re key turns on the truck when you get here, you can drive the truck home or win $10,000 cash. Have you ever heard of American Direct, Inc. before?” I, of course, said, “Yes, I’ve been to one of your presentations.” To which she quickly replied, “Oh, okay, I hope you enjoyed your presentation.”

Hmmm… Recently opened store my ass! And do you really think they call people randomly? I’ve received two calls in the course of just a few months. They are clearly targeting people living in working class neighborhoods. Bastards!