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West Virginia Sues Blue Hippo

Company Violates State Telemarketing Laws, Suit Charges

March 16, 2007

BlueHippo Funding An Investigative Series by Joseph S. Enoch • BlueHippo: Extreme Layaway • A Short History • The BlueHippo Foundation • Trouble Follows BlueHippo's Founder • What Should You Do? • BlueHippo's Response • BlueHippo Has Many Clones --- News • Gateway at Risk in BlueHippo Class Action • Blue Hippo Pays $5 Million To Settle FTC Charges • Federal Court Strikes Blue Hippo's Arbitration Clause • BlueHippo Funding Settles $1 Million Maryland Case • West Virginia Sues Blue Hippo • Class Actions Target Blue Hippo • Consumer Complaints

West Virginia Attorney General Darrell McGraw has filed suit against Blue Hippo Funding, the Maryland compapny whose ads proclaim that "all you need is a checking account" to buy a computer. The company's practices were exposed by ConsumerAffairs.com in an investigative series published in January.

BlueHippo advertises that consumers can buy a "brand new name-brand computer" on affordable terms. But what it fails to disclose, McGraw charged, is that consumers need to sign a written contract, make weekly or biweekly payments for nearly a year, and pay approximately $2,000.00 for a computer that they could purchase elsewhere for a fraction of that cost.

One consumer paid approximately $1,800.00 for a computer similar to one she bought at Circuit City for about $400.00.

BlueHippo does not keep computers in stock. Instead, the company requires consumers to pay an amount sufficient to cover BlueHippo's cost of purchasing the computer, plus a profit, before it purchases a computer and has it shipped to the consumer.

Consumers who make payments for the specified period often wait many more months before they receive a computer.

"Consumers should always be wary of ordering merchandise in response to television infomercials," McGraw warned. "Telemarketers are required to tell you their refund policy and all material terms of the agreement before they take any payment."

Most consumers who complained to Attorney General McGraw's Consumer Protection Division responded to information that they saw on television. When they called Blue Hippo's toll-free number, they were told they would have to authorize weekly or biweekly electronic debits to their checking accounts and that after they had made payments for about three months Blue Hippo would ship them a computer.

The consumers complained that they made many payments on the computers but never received either the computer or any more information from Blue Hippo.

Consumers who stopped paying on the accounts forfeited all the payments they had made under Blue Hippo's no-refund policy. The few consumers who did receive computers paid amounts that were many times the amount at which they could purchase consumers at ordinary retail stores.

Under West Virginia law, telemarketers, including those who advertise a toll-free number to which consumers respond, are required to be registered with the State Tax Department as a telemarketer and to post a bond. McGraw said Blue Hippo did not register as a telemarketer and did not post such a bond.

Under West Virginia law, telemarketers must have a refund policy that allows consumers to obtain refunds for returning goods or canceling services for a period of not less than seven days after the date of delivery to the consumer. Blue Hippo had no such policy, and, in fact, refused to return payments to consumers who canceled their transactions.

The suit names Blue Hippo Funding LLC, a Maryland Corporation; Blue Hippo Capital, LLC, a Nevada Corporation; and Joseph Rensin, the primary owner and operator of these two businesses.

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