FTC Files Contempt Charge Against BlueHippo For Continuing To Rip Off Customers

Today the FTC lodged a contempt charge against scammy no-credit-needed electronics seller BlueHippo, saying that the company hasn’t honored its prior agreement to stop scamming customers. BlueHippo agreed to pay back $3.5 million nearly two years ago to reimburse customers who never received the computers they pre-paid for, but the FTC says since then the company has sucked another $15 million out of customers.

BlueHippo has a history of not keeping promises. Here’s what happened in February 2008:

According to the FTC’s 2008 complaint, BlueHippo Funding, LLC and affiliate BlueHippo Capital, LLC offered to extend credit to consumers to finance purchases of personal computers and other consumer electronics with down payments of $99 to $124, and a year of weekly or bi-weekly payments ranging from $36 to $88. BlueHippo promised to deliver the product once the consumer made 13 weekly payments. But most consumers did not receive the computers they ordered in the time promised, even after they had made 13 weeks of payments, the Commission alleged. The Commission charged that BlueHippo’s marketing tactics were deceptive, and violated the FTC Act and other federal credit statutes.

Remarkably, the company continued to sign up customers as quickly as it had before the settlement, and between April and December of 2008 it contracted with over 35,000 new customers.

Of those, only 2,477 customers met all the requirements to eventually get computers, but the FTC says that BlueHippo provided at most only one PC to an eligible customer.

The FTC complained again in April 2009, and starting then BlueHippo began to fulfill computer requests for 1,462 qualifying customers. But even then it took up to 6 months to deliver computers to customers, when it sold the service with a promise of delivery in 3-4 weeks. The remaining 1,015 who were elgible have still received nothing.

The FTC has asked the court to bar BlueHippo from making any more sales, and to force it to repay customers. The BlueHippo website is offline as of this afternoon.

“FTC Lodges Contempt Charge Against BlueHippo” [FTC]

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  1. Underpants Gnome says:

    It amazes me that a company like this can exist, when $300-$400 computers have been available at WalMart for several years.

    On an unrelated note, the first time I saw an ad for these people, the first thing I thought was “Why is the company that exchanges my propane tanks selling computers?”

  2. XTC46 says:

    Thats pretty smart…tell people to pay you 88 dollars a week, and in 13 weeks you will send them a computer. Thats a massive profit.

    Even at the 36/week plan, I could build a computer and ship it for the amount I had at the 13 week mark, anything after that would be profit.

    I just dont understand how people can do this, but cant just leave the money in their bank account and wait 2 months then go buy a computer.

    • StanTheManDean says:

      @xtc46 – thinksmarter on twitter:

      Because people are too stupid to buy from WallWorld / Staples / Best Buy etc when they are in a hurry for a computer.

      I am from the land of Katrina. When your business has been flooded, your equipment has been destroyed and you need a computer just to access the interweb etc…… what would you do? Me? I run to the nearest mall area to find an electronics purveyor to grab the cheapest in-stock computer.

      I must have too many brains.

      Blue Hippo actually had a spike in sales…. Katrina victims needing a computer.

  3. morganlh85 says:

    I don’t get it. They are collecting something like $2000 from their customers for $300 PCs…WHY can’t they fulfill the orders? They are still making an insane profit!

  4. sonneillon says:

    Luckily a contempt of court charge can be a serious matter. This could mean jail time. Maybe the CEO should be hit with the old fraud stick. I bet those PCs would magically appear if the CEO was looking at 2,477 counts of fraud.

    • ChemicallyInert says:

      @sonneillon: Yeah but a corp. is a person. It’s not the CEO who dunnit, it was the corporation so we should put the corporation in jail for a day. (In case you couldn’t tell, there’s sarcasm in them thar hills.)

  5. savdavid says:

    Look, if you take in $20 million in profit and pay $5 million in fines you are making a great profit. Hippo just sees it as the cost of doing business. In fact, most of the companies who sell defective junk, false advertise, lie to buyers, etc… know they have little to fear. Why do you think there are so many infomercials selling crap? Get in quick with saturation ads, sell as many units as quickly as possible by lying, pay a fine and count your money. Repeat.

  6. rpm773 says:

    I’m kind of surprised anyone owned up to being scammed by a company called “Blue Hippo”.

    It must have been tough, but in the end they did the right thing. I’m proud of them.

  7. tinmanx says:

    I just saw a deal for a $250 Acer laptop at Best Buy today. It’s not a netbook, but a notebook with a 15″ screen, 2GB RAM, DVD burner and Windows 7. Not the best laptop around and not very powerful, but it’ll do what most people will use the laptop for.

    With prices like this there’s no reason way BlueHippo can’t fulfill the laptop shipments, other than greed that is. Getting it in bulk direct from Acer will probably cost even less.

    Someone should start a legit version of this, there’s lots of money to be made even when everything is done right.

  8. consumerd says:

    haven’t these people heard of craigslist? or hell a PC repair shop? Surely they could have bought a not quite new computer and it still be capable for as least a few more years.

    • AK47 - Now with longer screen name! says:

      @consumerd: That’s exactly what we said the first time we saw these commercials. The one we saw said $49 a week – that’s $2548 for a computer of questionable value. Seriously?

      I’m always sad when people get scammed, but this deal was clearly a ripoff from the beginning – - and you can tell that from the large print!!

  9. almightytora says:

    “The BlueHippo website is offline as of this afternoon.”

    No, it’s not. I just went to it.

    [www.bluehippo.com]

  10. Outrun1986 says:

    The problem with the walmart computers is that blue hippo targets people who cannot afford a computer now, but can afford a little bit every month towards one. If people could afford to spend $300 on the walmart computer at once they would go there and buy it. Its a payment plan just like rent a center (except you never get your computer in the end).

    Why these people don’t put the money into some other kind of savings account and just save until they have enough for the computer I will never know. Perhaps with the return of layaway if they could find a store that sold computers and had layaway they could put one on layaway.

    Most people are ignorant of technology prices and think computers are expensive, when they are relatively cheap machines out there these days. Most home users will only need one for basic tasks such as internet so a $400-500 machine would probably suffice for a lot of families with children. But there is a perception amongst those not in the know that computers are $1000+ machines that they cannot afford.

  11. drjayphd says:

    But but but they had to keep ripping off customers to pay back the fines! How else are they going to afford it?

  12. outlulz says:

    I’ve seen the computers Blue Hippo offers and they sure aren’t worth the $1100 they get from the consumer.

  13. sasquatch28 says:

    I’m sorry but if you are stupid enough to fall for these scams then you deserve to have your money taken. However it is nice to see the government cracking down on some of these sleazy companies. Sometimes I feel like I’m living in Russia or China with all these scams everywhere.

  14. CumaeanSibyl says:

    Is BlueHippo one of those that bills itself as a computer seller and also a credit repair service? “Send in your payments on time and help rebuild your credit score!”

    I’ve seen that angle taken by a bunch of rent-to-own places and it makes me feel kind of sad, but then I’m not sure if the terms on your average low-limit secured credit card, meant for consumers with poor credit, are that much better.

  15. blandname says:

    I seriously cannot believe anyone fell for the Blue Hippo scam, why not just put $99 or whatever a month into a shoe box and just straight up buy one of the perfectly good ~$400 computers at Walmart or Best Buy after a few months? You can even get a decent laptop for $400 now, and Blue Hippo won’t even send the computer until you have paid far more than $400. Am I the only one who doesn’t see any reason why anyone, even the poorest, would want to do this?

  16. halcyondays says:

    This is all the more ridiculous since Wal-Mart has brought back lay-away. If they’d advertise that angle, it would help put a few of these scammers out of business.

    • Eat A Peach says:

      @halcyondays: They’ve apparently only brought back layaway at some of the Walmarts out there. They discontinued the service at our Walmarts in the NE of Philly area a few years ago and they indicated they have no intention of bringing it back to their stores here.

  17. Blueskylaw says:

    Account Login
    To login to your account simply enter your social security number and password (often your mother’s maiden name) to the right.

    Or if that’s not working you can also enter:

    Social Security Number/Home Phone
    BlueHippo Account Number/Home Phone
    Social Security Number/House Number
    Bank Account Number/Zip Code
    Social Security Number/Password

    BlueHippo asking for this information is insane since I have not even made up my mind to purchase anything yet.

    I believe that I would get the exact same results if I gave my social security number and mothers maiden name to some strange guy selling meat from the back of his truck.

    • MichClay says:

      @Blueskylaw:

      If anyone is dumb enough to enter that information on a website named “BlueHippo,” than I am fully convinced now the world is coming to an end.

  18. Dyscord says:

    Blue Hippo is a scam?! What the hell?! You mean I can’t easily get a computer AND a big LCD TV?!

    Seriously, when I first heard the commerical I was thinking “Hmmm…sounds like a rental company or something. You pay a premium for a computer that’s underpowered.”

    Then I heard the line about a “Free HDTV” and called bullshit on the whole thing.

    Reminds me of an ad I got the other day about being able to save $400 on an $800 computer running WinXP, 40 GB hard drive and 512MB of ram.

  19. dasunst3r says:

    I hope the executives of this company get their freedom taken away from them and their fine be DOUBLE of what they ripped off from consumers.

  20. cash_da_pibble says:

    I feel so bad for that cute Blue Hippo. He probably thought he was REALLY helping people. :(

  21. dmuth says:

    That’s what they get for having a blue hippo mascot. There can only be one blue hippo.

  22. Grrrrrrr, now with two buns made of bacon. says:

    Can you say “Blue Rippo?” I can’t believe this company still exists.

  23. hammitz says:

    @humphrmi: That’s not a ponzi scheme, that’s just stealing.

  24. DeeJayQueue says:

    @temporaryerror: Yeah, but with Blue(R)ippo(ff) You DON’T get it now. You have to pay into the system and then in 3-4 weeks they supposedly send you a computer. It’s like a secured credit card. On top of that there’s some sort of “worthiness” system they use to determine if even then you’re eligible to receive a computer.

    But they sure make themselves out to be like rentacenter to attract less worthy, less intelligent and less savvy buyers.

  25. scootinger says:

    @temporaryerror: It’s not instant gratification…you have to make 3 months of payments (out of 1 year’s payments), THEN you receive your PC. I remember looking at the numbers a few years ago (not sure if it’s the same now)…basically, you could buy an equivalent PC at Best Buy for the total amount of the 3 months’ payments. Really sad.

  26. Bob Lu says:

    @hammitz: Agree.