You can obviously avoid department store bikes by buying from reputable local bike shops, but how can you tell whether a used bike is a department store bike? Are there any telltale signs? I have a friend who is looking to buy a used bike, and I would like to tell him what to look out for.
As per @Mikes Answer, but a bit more than fits into a comment.
Only buy a bike with the brand/model of major components able to be researched.
On a Mountain bike, shocks are a dead giveaway, and if rear suspension, look at the shock, although they sometimes don't have a model, the good ones always have a brand. From there, pictures will get you close enough. Also look at the geometry - if it looks like a light weight motorbike it's rubbish (Unless it's a top end down hill rig).... keep in mind age makes a big difference here, so search teh internet for parts of similar ages.
Brakes - Disk brakes should have a brand/model than can be researched. Rim brakes usually have something, but it's always a bad sign if not.
Seat / Seat post - worth a look, not a bad sign if no brand.
Drive train components can be tricky, many shops put an expensive rear derailleur on an otherwise cheap bike (That is all many people look at). Look at the cranks, the front derailleur, the shifters etc. These will usually have model information somewhere. Wheels and hubs - again look at the brand/model - most came out with labels.
One useful guide is overall weight - lighter bikes cost a lot more. BUT make sure you compare like for like. No point comparing a carbon frame to a steel frame and assuming the carbon is better because it's lighter.
For a novice stick to a brand/model that you can get the details off the internet. Look for a bike that has signs of light or no use. Everything should work smoothly and reliably. No groans, squeaks, clattering of any sort. The problem is any of these can be a sign of big money or a 2 minute tweak to fix and it takes expert eye to tell the difference.
Some department store bikes are actually pretty decent. A few years ago some of the bigger named bike companies started selling bikes through WalMart and other stores. Which tubes are 4130 and which are just high-ten is near impossible to tell unless someone told you so look for other signs of higher quality. I will look at the welds, if you have centipedes you have a better bike than one with toothpaste welds:
After you decide the frame is good enough, look at the components: do the derailleurs look flimsy? Check if the brake levers and shifters look solid. Do the cranks and chain look strong? Is part of the bike painted day-glo pink? It would be nice if they had all the original stickers, but if not, you need to use your judgement.
Start with the frame and then the parts; you rarely see good parts on crappy frames, unless someone is trying to trick you, and then, you can take the parts and put them on a good frame.
The first thing I look at is the components. Even the cheapest bikes have Shimano components, however they are below the lowest tier. It will say Shimano but will have no tier designation such as Deore,Ultegra,Alivio,etc. Go to the Shimano website and check out the component levels so you"ll be familiar with the names. One give away of a cheap bike is a "Shimano Equiped" or "24 speed" sticker on the frame. As @WTHarper has said manufacturers that sell bikes to Large box stores often do not list those models on their websites. Talk to your local bike shop and ask about trade-ins. Generally bike shops will only take a good quality bike in trade. Ask them to show you the charateristics of a good bike. It should have quick release wheels, a threadless headset, double wall rims to name a few.
The majority of department store ("mtb") bikes uses 1" quill stems, have bolt on wheels instead of quick releases, has a free-wheel instead of a cassette, typically has a one piece crank w/plastic pedals, a chain guard on the front sprocket, seat post diameter has a continuity of being 27.2, usually never has a spot to put a normal bottle cage on the frame due to the extravagant shape with equally extravagant graphics/decals, and lastly on the "dual" suspensions they are all equipped with a summer shock.
Since I am presently the victim of a department-store bike, I can add one indicator that a used bike came from such a place: In the time it has been owned, its operability will have declined more than the total use so far would justify. This is due to all of the corner-cutting in the production process. DSBs are all great and fine on a flat, level surface (like in the aisles of the toy department where the bike is sold), but after any amount of hard use the wheels get wobbly, the seat starts tilting, shifting goes whacky, and so forth.
Another sign of a used DSB is that it will need some degree of TLC to make it operable. (Yes, I know, the new ones are often like this...) This is also a result of the corner-cutting in the production of these bikes. Many of the features of quality bikes don't make them faster or more durable, but do make them easier to fix and/or maintain (like quick-release axles vs. bolt-on axles). These features are the first to go when a maker wants to cut corners, and the result is a bike that is much more difficult to repair and/or maintain, so much so that the owner says "screw it" and doesn't bother.
(And unrelated to the question, but it's another lesson I've learned in this: Never lend your bike to someone who has trouble holding down a job. It seems that lacking a work ethic, and lacking respect for other people's property, correlate highly.)
With old road bikes (e.g. pre-brifter) it's often as simple as looking at the shifters. If they're on the stem, it's a department store bike. If the shifters are on the downtube, it was probably from a bike shop. The only exception is that some touring bikes supposedly came with stem shifters.
Another great indicator with older bikes, if it's a butted frame, is to look at the lugs. The more ornate a lug is, generally speaking the higher quality the frame will be.