Add BlueHippo to the list of life's sad certainties

December 04, 2009|By Jay Hancock

BlueHippo, the Woodlawn company that regulators just accused of collecting $15 million in electronics orders last year and delivering hardly anything in return, has a cigar-store Indian and a bust of Benjamin Franklin in the lobby.

Where's owner Joseph K. Rensin? "Even if I knew, I wouldn't be able to tell you," says a woman at the reception desk. What about Andrew Campbell, the BlueHippo lawyer who said last year that the company had made "tremendous progress" in its customer programs?

Campbell sent out a lawyer named John Burcham. There are a lot of lawyers working for BlueHippo.

"We're standing by our press release," says Burcham. "We don't have further comment at this time."

When corporations plunge into crisis, publicity pros usually advise them to protect their reputations by responding as openly and completely as possible. Maybe there's a different playbook if the reputation is beyond repair.

Rensin and BlueHippo have spent years abusing customers, according to the Federal Trade Commission. Now creditors are in for a rough time, too.

The company landed in bankruptcy court last week after the FTC sought a contempt order and alleged that it again broke promises to shape up. BlueHippo owes millions to law firms, call centers and advertisers, including several in metro Baltimore, court papers show.

The company blames its bank, which froze its funds. But First Regional Bank was forced to sequester the money, it said in a Delaware bankruptcy court filing, because last month's FTC complaint gave "reason to believe BlueHippo was violating federal or state laws."

It wouldn't be the first time such suspicions had come up. BlueHippo's six-year history is an astonishing case of how badly corporations can treat clients and stay in business. The company sells electronics at huge markups on cable TV to people with low incomes. If you make a certain number of small monthly payments, BlueHippo promises to ship the hardware and finance the balance.

But complaints about undelivered computers soon swamped regulators and the Better Business Bureau. "They get away with it, and they just get greedier and greedier," Maryland Attorney General Douglas F. Gansler told The Sun in 2007, after the company agreed to a settlement that ended up costing $3.5 million.

BlueHippo said it would set up "best practices." Last year, it agreed to pay another $3.5 million to settle federal allegations that it had cheated customers.

Now the FTC has sued it in federal court, alleging that the company "flouted" that agreement. From April to December 2008, "less than 1 percent of consumers who signed up with BlueHippo received the financed computers they applied for," the complaint said.

If you think business regulation is too tough, don't blame regulators. Blame companies like this for making them necessary.

It's rare for the FTC to have to sue a company accused of violating a settlement, says James Kohm, associate director for enforcement in the agency's consumer division. This time with BlueHippo, he says, "we want them banned from selling any goods and services on credit" and from selling consumer electronics altogether.

No wonder BlueHippo doesn't want to talk. Nothing is certain but death and taxes, Ben Franklin said. He should have added: And dubious companies taking advantage of unsophisticated consumers.

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