By Mark Huffman
ConsumerAffairs.com
June 29, 2010
Pennsylvania has become the latest state to sue BlueHippo, the Maryland-based finance company that sells older, cheap computers at hugely inflated prices to people with poor or no credit.
Pennsylvania Attorney General Tom Corbett said the civil lawsuit was filed in Commonwealth Court against Joseph K. Rensin, of Ellicott City, Md., the owner, CEO and Chairman of the Board of BlueHippo Funding, 7000 Security Boulevard, Baltimore Maryland. Rensin and his business also operated as BlueHippo Capitol, of Vienna, Virginia and BlueHippo Capitol, of Las Vegas, Nevada.
"BlueHippo used a national campaign of television and radio ads, telemarketing calls and Internet websites to sell computers, flat screen TVs and other electronic equipment -- claiming to offer 'payments you can afford' for 'top of the line' products," Corbett said. "In reality, BlueHippo was little more than a sham designed to collect as much money as possible from consumers while delivering little, if anything, in return."
According to the lawsuit, consumers often paid more than twice the value of the items that they had purchased, received lesser quality items or failed to receive anything for their money. In other instances, the company did not provide rebates or gifts that were offered as part of a sale, or failed to pay consumer refunds when promised.
"BlueHippo allegedly used advertising language such as 'perfect for back to school' and 'get yours now,' which suggested fast delivery times," Corbett said. "While many customers believed they would receive their products in a timely manner, most were delivered months later -- or, in some cases -- not at all."
Trouble with the feds
Last November, the Federal Trade Commission (FTC) asked a federal court to find Blue Hippo in contempt of a 2008 court order that required it to end abusive consumer practices.
Since the order, the FTC estimates Blue Hippo has collected more than $15 million from consumers to finance computers, but delivered neither the financing nor the financed computers.
The FTC alleged that fewer than one percent of consumers who signed up with BlueHippo received the financed computers for which they applied, and undisclosed conditions to redeem "store credits" were rigged to discourage consumers from using them.
ConsumerAffairs.com continues to receive many complaints about BlueHippo, such as this one from Pamela, of Patterson, Calif.
'I smell a rat'
"I thought I was purchasing a computer. After I sent $100 to get the payments going, they told me it was a layaway and I don't get the computer until it's paid in full," she told ConsumerAffairs.com. "I smell a rat. I could go to any store I want for a layaway and pay two times less."
According to the Pennsylvania lawsuit, BlueHippo did not actually have any of the products they claimed to be selling. Instead, consumers were persuaded to make a series of weekly or bi-weekly payments to BlueHippo, and only after a history of successful payments would the products supposedly be ordered and shipped.
Corbett said that during sales calls, consumers were often asked for bank account information, with BlueHippo making immediate withdrawals from their accounts long before consumers received any written information about the financing terms or other conditions about the purchase.
Additionally, BlueHippo is accused of conducting telemarketing without properly registering in Pennsylvania, operating as a loan broker without registering with the state Department of Banking, violating the Installment Sales Act and failing to register corporations and fictitious business names with the Pennsylvania Department of State.
Corbett said the lawsuit seeks full restitution for all consumers who were harmed by BlueHippo's unfair business practices, along with fines and penalties of up to $1,000 for each violation of Pennsylvania law, or fines of up to $3,000 for each violation involving a senior citizen.
