FTC seeks contempt order against BlueHippo

Agency looks for customer refunds and more

November 13, 2009|By Eileen Ambrose | eileen.ambrose@baltsun.com

BlueHippo Funding, the Woodlawn electronics sales company that has been the subject of thousands of consumer complaints and the target of regulators in multiple states, is again in trouble.

The Federal Trade Commission on Thursday asked a court to find BlueHippo Funding in contempt, claiming the company violated a settlement by continuing to take millions of dollars from consumers and failing to deliver computers as promised.

If the court issues a contempt order, the FTC also seeks bans that would prevent BlueHippo from financing and selling consumer electronics, said James A. Kohm, associate director of the FTC's enforcement division.

BlueHippo officials did not return phone calls Thursday seeking comment.

The six-year-old company, owned by Joseph K. Rensin, caters to consumers with poor credit. The company's Web site said it helps consumers finance a computer by allowing them to pay through 52 weeks of layaway payments. BlueHippo promises to ship the computer once a customer makes six to 13 consecutive weekly payments.

BlueHippo has a long history of complaints from consumers and regulators who accuse the company of deceptive sales practices, failing to deliver goods and pricing computers far above the retail price.

The Better Business Bureau, which has received 4,135 complaints against BlueHippo in the past three years, gave the company an "F" rating. Illinois and West Virginia have sued the company. And in May 2007, BlueHippo reached a settlement with Maryland and paid $3.5 million in restitution to residents.

Maryland's attorney general hasn't received any complaints from residents about BlueHippo since the settlement, said Raquel M. Guillory, spokeswoman for the regulator. The settlement placed such severe restrictions on the company that it no longer sells to Marylanders, she said.

The FTC's latest action accuses BlueHippo of violating a separate settlement in April 2008 that required the company to pay $3.5 million in restitution. BlueHippo paid, but the FTC said the company returned to its deceptive practices.

The agency says BlueHippo falsely promotes itself as a finance company. BlueHippo received more than 36,000 computer orders in the eight months following the settlement and collected about $15.2 million in payments. But in that time, BlueHippo financed only one computer, the FTC said.

After the agency notified the court in April that BlueHippo had violated its settlement, the company started ordering thousands of computers, the FTC said. Even so, BlueHippo failed to order computers for 1,015 consumers who qualified for financing by making 13 weekly payments, the FTC said.

The agency is seeking refunds and other compensation for consumers, a sum that could exceed $20 million, Kohm said.

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