BlueHippo to offer computer refunds

June 28, 2006|By EILEEN AMBROSE | EILEEN AMBROSE,SUN REPORTER

BlueHippo Funding LLC, the Woodlawn-based computer sales and finance company facing consumer lawsuits and investigations by state and federal regulators, announced yesterday that it created its first refund policy.

Under that policy, BlueHippo said consumers can cancel a layaway purchase and get their money back, minus a $175 early termination fee. The refund policy comes a month after the company announced it was launching a quality-control program.

Michael Waldron, a spokesman for BlueHippo, said the new policy isn't a response to the lawsuits and regulatory scrutiny.

"Our decision to implement a refund policy has been in the works for some time," Waldron said. "Over the three years of BlueHippo's existence, we have looked at practices that work and that didn't work and we adjusted to try to meet the needs and desires of our customers."

BlueHippo sells computers and plasma TVs nationwide to people without access to traditional credit. Generally, consumers pay $99 up front for a computer and BlueHippo promises to ship the computer after three months' worth of payments are received through automatic debits from a bank account. Payments thereafter are financed through BlueHippo.

In its brief history, BlueHippo has generated hundreds of consumer complaints to the Better Business Bureau and the Federal Trade Commission. Consumers often complained they never received their computers or couldn't get refunds. Critics claim that BlueHippo sells outdated computers for five times the retail price.

The state of Illinois sued BlueHippo late last year on behalf of consumers. Florida officials said earlier this year that they were investigating the company. The FTC won't comment on the company, but documents on the agency's Web site indicate an investigation of BlueHippo is under way.

A spokeswoman for the Illinois attorney general's office declined to comment on BlueHippo's refund policy, noting current litigation.

David J. Marshall, a Washington lawyer suing BlueHippo in California, said the refund policy is BlueHippo's attempt to avoid legal problems.

"BlueHippo is attempting to escape liability for having stolen millions of dollars from consumers by announcing a policy under which it will now take only $175 from each consumer who decides to cancel their contracts," Marshall said.

Waldron said the $175 fee is similar to cancellation fees charged by cell phone providers. The refund policy also is available upon request to those who previously signed a nonrefundable contract, Waldron said.

Besides the refund, BlueHippo said it created a layaway program in which a computer is shipped after consumers make payments for 52 weeks.

Meanwhile, Marshall is seeking to add computer manufacturer Gateway Inc. as a defendant in the California lawsuit that is seeking class action status. BlueHippo sells Gateway computers.

The lawsuit claims that the Irvine, Calif., manufacturer conspired with BlueHippo in its fraudulent and misleading sales practices.

A hearing on Gateway's inclusion will be held early next month, he said.

eileen.ambrose@baltsun.com

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