|Shopping Clubs Under Fire|
Dec. 21, 2000: The article which follows makes a lot of references to Structured Development LLC and was formerly linked to articles and information at the Structured Development website. But in April of 2000, UCC obtained a "protective order" from the courts forcing SDLLC to remove this considerable information from their website. The primary source for complaints about UCC is now The Complaint Station. See also my short article - Getting Out of the Deal - for advice on how to get out of a deal you were fast-talked into if you have had second thoughts. (See box at right for links).
In June I reported on a visit by my wife and I to a pitch for the UCC TotalHome Consumers Club. I concluded that the steep cost of joining such a club precluded any benefit unless you were immediately in the market for some big ticket items. Besides, with the advent of online shopping, such clubs may be obviated before long as manufacturers of big ticket items (and even small ticket items) start selling to the public directly.
Since my report I've received a number of emails with tales of woe about UCC TotalHome. The company is being sued on a number of fronts. These correspondents have asked me to do a follow-up, so here it is. If you missed the original article, click the link in the box above right.
The first inkling of problems with United Consumers Club, also known as UCC TotalHome, came in an email shortly after I wrote my June article. The correspondent was from the Seattle area and had joined and ordered a complete suite of furniture from the club in December. He was still waiting for delivery and getting increasingly frustrated. But he did not want me to publish his letter as he didn't want to ruffle any feathers and still hoped things would work out.
Then in August I got another email, this one from Leonard Nicholson, Operating Manager for Structured Development LLC in Kenner, Louisiana. Structured Development is a former franchisee of United Consumers Club and in February of 1998 launched a lawsuit against United Consumers Club alleging fraud and violations of the RICO (racketeering) Act and Louisiana Unfair Trade Practices Act.
The statement of claim charges UCC with "intentional and negligent misrepresentations, false advertising, bad faith, breach of contract and for tortious conversion and unjust enrichment in response to a longstanding scheme by defendants to defraud Structured Development, L.L.C., and thousands of Louisiana consumers, out of large sums of money".
Since then Structured Development has developed a website tracking all the legal actions against United Consumers Club. There are four primary cases pending and seven other related cases pending or past. They've also kept track of every reference to UCC TotalHome on the Internet they could find.
The primary suit by Structured Development (SDLLC) is a tortuous and convoluted case of claim and counter-claim. SDLLC is suing United Consumers Club who are counter-suing SDLLC and its principals who are counter-counter suing Millenium Management Inc. (an alleged close affiliate of UCC). The case so far is too daunting for me to even want to begin to wade through it. You can get an idea by visiting the history of the case at Structured Development's website (Note: SDLLC was forced to remove this information by an injunction sought and granted by UCC TotalHome). It includes complete transcripts of over fifty motions, responses, memoranda, objections and rulings from February 1998 through October 1999.
But the upshot is this: Structured Development claims that
The above are edited direct quotes from Nicholson's email and can be seen in their entirety at the Structured Development website as an Update Report dated August 30, 1999. As Nicholson concludes, "these are all very disturbing facts." At the time of the Update, the case was in the discovery phase of litigation.
As a former franchisee, Structured Development received many complaints from members about problems. These letters, which are part of the basis for the lawsuit and which might be considered as evidence, are reprinted on the website's "A Selection of Members Communicating Their Concerns and Disappointments". Here are a few excerpts:
You get the idea. There are over thirty-five of these letters. Then there is a collection of Correspondence between SDLLC, UCC, lawyers, credit collection agencies, and so on. The correspondence between SDLLC and AAA Credit Service concerns alleged dunning of 44 customers. (Dunning is billing and being paid twice for the same service.)
The other cases: Eight franchisees in Maryland, New York, Rhode Island, and Pennsylvania sued UCC and affiliated parties including founder James Gagan for alleged racketeering under the RICO Act, specifically alleging mail fraud, wire fraud and money laundering. (Paragraph 147 of complaint) and misrepresentation (Paragraph 158). The entire documentation is on the website as White et al Vs. United Consumers Club. The suit was launched in August 1997. Parts, but not all of the suit were dismissed by the court in June 1998. It is unclear from the documents where the case now stands.
Then there's Stachon et al Vs. United Consumers Club, a class action suit filed by two club members in Illinois "on behalf of themselves and all others similarly situated". The suit makes the same allegations as in the SDLLC Update Report noted above. The suit was launched in November 1998 and is still before the courts.
The fourth major lawsuit, which you might call the "covering your ass" suit, is by State Farm Insurance, insurers for James Gagan, UCC and many other affiliated companies and individuals. It argues that State Farm's insurance policy should not be construed in such a way that the defendants can make claims against it arising out of the lawsuits pending against them.
The other cases are lesser ones or older ones, including one dating back to 1981 in which fifteen couples sued UCC for $32,000 for merchandise that was paid for but not delivered after a local franchise went bankrupt. The case dragged on for over three years and was dismissed because the plaintiffs could not pay the court costs to continue. They joined a class action suit in 1994.
In UCC's defense, one should note their statement in a motion to dismiss the lawsuit by Structured Development: "Plaintiff failed as a UCC franchisee. So it sued everyone who had anything to do with UCC, blaming them for plaintiff's self-inflicted results." Nevertheless, SDLLC seems to have laid everything out on the table at their website - the good, the bad and the ugly.
Clearly, the United Consumers Club or UCC TotalHome as it is now called, is not all it's cracked up to be. There's a couple of old proverbs to heed here. One: If it sounds too good to be true, it probably is. And two, most importantly: Caveat emptor! Buyer Beware!