West Virginia Court Voids All Money Owed To Blue Hippo

If you are a resident of West Virginia and the now-defunct computer layaway company Blue Hippo says you owe it money, you don't.

West Virginia Attorney General Darrell McGraw says his office has obtained a judgment against Blue Hippo Funding, LLC and Blue Hippo Capital, LLC that wipes out any existing debt held by the firms.

The court order permanently enjoins the BlueHippo entities from doing business in West Virginia and declares all BlueHippo contracts with West Virginia residents void, resulting in over $500,000 in cancelled debt.

Consumers don't have to pay

Under the terms of the order, consumers are not obligated to pay any amounts on their contracts with BlueHippo, regardless of whether the contracts are sold or sent to collection in the future.

From 2003 to 2009, Blue Hippo ran an extensive media campaign that advertised the sale of computers on television, radio, internet and print media. The ads represented that "all you need is a checking account" and consumers could buy a "brand new name-brand computer" on terms that were affordable.

However, BlueHippo failed to disclose that it was a horrible deal for consumers. For example, they would need to sign a written contract containing onerous terms, that all payments were nonrefundable, and that if consumers ever made a late payment they would be required to pay for the computer in full before receiving it and also be billed for any "free" merchandise offered as an incentive to purchase the computer.

Broken promises

Most consumers never received a computer or the promised free merchandise. The few who did, received computers that did not have the capabilities advertised and were technologically outdated. They were also incredibly over-priced. Comparable or better machines could be purchased at Wal-Mart at a fraction of the cost.

In 2007, Attorney General McGraw sued BlueHippo for consumer protection violations and got a temporary injunction. Under West Virginia law, telemarketers, including those who advertise a telephone number to which consumers respond, are required to register and post a bond ($100,000 per telemarketing location) with the state tax department. McGraw said BlueHippo did not register as a telemarketer and did not post a bond.

Telemarketers must also 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. BlueHippo had a no-refund policy and refused to return payments to consumers who canceled their purchases.

Defunct since 2009

BlueHippo stopped doing business in late 2009. Both BlueHippo companies and about 50 related businesses, all owned by Joseph Rensin, filed for bankruptcy in Delaware in November 2009.

The bankruptcy trustee recently abandoned the accounts receivable owed to BlueHippo under its consumer contracts, and the bankruptcy judge made no decision about the validity of the consumer contracts. Because of this, consumers may receive further contacts attempting to collect on the BlueHippo contracts in the future. But McGraw says, no matter what a debt collector says, the contracts are void.