BlueHippo Files Chapter 11 After Bank Accounts Frozen

It appears that when the FTC filed a contempt charge against scamtastic consumer electronics purveyor Bluehippo, the company’s bank took notice and froze their accounts. Now Bluehippo has filed for Chapter 11 bankruptcy protection, claiming that they can’t repay their creditors, what with the frozen bank accounts and all. This will not end well.

If you’re not familiar with Bluehippo, they’re essentially a computer layaway service. Or what rent-to-own would be like if, after paying high weekly fees for a lengthy period, there were a chance that you might eventually receive an obsolete computer to use. Thousands of customers allegedly never received their computers.

According to the Baltimore Sun:

“First Region’s Bank explained in an e-mail that it was freezing BlueHippo’s accounts solely as a result of a recent press release issued by the FTC – a press release that is replete with factual inaccuracies,” BlueHippo said in a statement. The company said it believes the bank’s actions were unlawful and left BlueHippo unable to pay its creditors. BlueHippo added that it has demanded that its funds be immediately restored.

Shoe’s on the other foot now, eh? Incidentally, Bluehippo no longer does business at all in the state of Maryland.

BlueHippo files for bankruptcy [Baltimore Sun] (Thanks, Joe!)

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  1. Lucky225 says:

    Sweet Sweet Revenge

  2. ScottyB says:

    If they just would have remembered the story of the hippo. http://www.youtube.com/watch?v=fLp2AYGlrFY

    • Andrew360 says:

      Thanks for the video and all, but the only connection I see is that all the (scammed) customers of BlueHippo said, “I’m going to kill you!” …and they did. :)

      I guess their vendors can now join in the fun as well.

  3. sonneillon says:

    Took long enough for this scummy company to go out of business.

    • humphrmi says:

      Unfortunately, Chapter 11 ensures that they will stay in business.

      • zacox says:

        That’s not always true. See Circuit City, Linens ‘n’ Things, CompUSA, etc. For legitimate companies, Chapter 11 gives them enough time to ascertain whether they can make it as a company or to start liquidating assets. For Blue Hippo and other questionable outfits, Chapter 11 gives them just enough time to plunder the company for all they can.

        I actually went to the Bluehippo website to see what I could see. Naturally, there is no mention of the bankruptcy or the FTC filing, though there is mention of an old 2006 FTC settlement. I’m guessing that they are finding a new bank (and new merchant provider if theirs quit on them too) and looking to rake in as much dough as possible. I only got as far as a sign-in page when ordering something, and it requires a SSN. I wonder why a company that advertises no credit check might need an SSN….?

  4. humphrmi says:

    First Region’s Bank explained in an e-mail that it was freezing BlueHippo’s accounts solely as a result of a recent press release issued by the FTC – a press release that is replete with factual inaccuracies

    I always love the feigned indignity from companies that make a living off of ripping people off, as if they are the victim. Nobody ever believes their statements, and in the end the courts will find against them. And the company execs will probably still feign indignity, only expand the scope – instead of the bank, the bad guy will be the justice system, the judge, the jury… everyone but their own stupid people who came up with the plan to scam the people least able to afford their scam.

  5. teletone says:

    My brother actually got a computer from them with Lexmark printer. They were also supposed to also send him an lcd monitor, but that obviously didn’t happen. What he finally paid in installments was definitely more than what the computer was worth. I suppose he should be lucky that he even got the computer at all, though. Lesson learned

  6. LESSTHANKIND says:

    I saw a commercial today for a similar company. Payments of $30 a week. They circumvent the “why not just save up $30 a week yourself and buy it?” argument by reporting the payments on credit reports, so they can claim to be helping you build your credit. I’d be willing to bet they only report to one credit bureau. It’s so not worth $120 a month for however long, just to get that one loan-shark item on your credit report. Or that cheap computer.

  7. StanTheManDean says:

    Allegedly.

    Remember, Allegedly.

    Of course anybody with half a brain can do the math and figure out they are getting royally screwed.

    Allegedly.

  8. Bee says:

    I’m just amazed that people thought buying a computer from Bluehippo was a good idea in the first place. I heard their ads and thought that it was way too good to be true. (And it was.)

    • JeffM says:

      Wait- how is this service too good to be true?

      • witeowl says:

        Exactly. I always thought the deal was too stupid to be made.

        • Bee says:

          Okay, that’s what I get for posting comments while half asleep. Blame chasing after my little nephews for two day. It should read “too stupid to be true”.

    • ludwigk says:

      Their deals were always (if you tallied up the payment schedule) something like $2,700 for a $800 computer. Nothing too good to be true about it. The fact that they didn’t even send you your kit is just.. um ballsy?

  9. frodolives35 says:

    I wonder if I could trade my old unused gold for a crappy computer. Hum I foresee a new business opportunity.

  10. madanthony says:

    Their business model actually makes rent to own look good. At least rent to own, you pay way too much a week to use something. BlueHippo has you pay way too much a week and maybe eventually you get a computer, but probably not.

    I also find this puzzling:

    The company lost $1 million last year and $1.8 million for this partial year.

    How do you have a business plan where you charge people several times the cost of a computer, and maybe never actually send them a computer, and still lose money?

    • frodolives35 says:

      Excutive compensation.

    • StanTheManDean says:

      Advertising Costs.

      Advertising as in trolling for suckers

      (sucker, definition: a type of bottom feeding fish similar to catfish, also {allegedly} the word used to describe the customers of BlueHippo …. aka the feeble minded people who expect something for nothing)

      costs a lot of $.

      And then there are those pesky AG enforced penalties.

    • Nighthawke says:

      Last year almost EVERYONE lost their shirts to this fiscal debacle with bad/no credit and toxic loans. You can easily tell where these jokers invested in.

      “Birds of a feather…”

      Heh. Serves them right.

  11. lostallsynapses says:

    I was wondering if this a possible computer/elderly scam. http://www.thegocomputer.com/ I can’t find any information on the make, operation system, or hardware. For $880 and enrollment in a $20/month service plan, it better be a decent computer. Just found it browsing through catalogs over the turkey holiday with the family.

    • Infinitrium says:

      * Intel Atom N270 Processor
      * 1 GB Ram
      * 160G Hard drive
      * 4 USB Slots
      * Built-in Wireless
      * Speakers come built-in

      It’s a netbook-desktop running some flavor of Linux I imagine.

      • Laura Northrup says:

        Hm. In terms of specs, that sounds like the computer I just built for $200, except mine has twice as much RAM, no wireless, and isn’t in an iMac-type body like the Go Computer. So that actually doesn’t sound TOO bad.

      • Nighthawke says:

        Smells like the Acer Aspire One. A little sawed-off runt of a system I bought on a whim just to see what it could do. Now i’m planning to hack into it and make it into something more wicked.

    • ngoandy says:

      It sounds like an AOL type service. At least that is what the interface looks like.

  12. pecan 3.14159265 says:

    People ask how Blue Hippo customers could have possibly thought that renting a computer was a good idea – and the truth is, I have no idea why people would think it was a good idea. But I do know that people are irrational, and I know that people do things that don’t make sense probably because they just don’t know any better. This doesn’t absolve them, of course. But I was picking up some wrapping paper today, and there was a pack of three rolls for $5 for a total of 120 square feet. There was a big selection of other wrapping paper that was 70 feet each, and were $1.50. So for $3, you could have 140 square feet – or you could spend $5 and get only 120 feet. The boxes of the combo packs were nearly empty, while the boxes with individual rolls were still full. Why don’t people realize that one is a true deal, and the other one isn’t? Because sometimes they just don’t know any better.

    • friday3 says:

      Not a good comparison unless the wrapping paper that was cheaper was exactly the same design. I am sure if you went to the store you could find a purple suit with pink stripes made of polyester much cheaper than a charcoal grey pinstripe wool suit. If I like the design on the wrapping paper that is only a few dollars more, I am willing to spend it. It is a once a year expenditure. What bluehippo does is pawn off a computer worth say $500 and demand payments of say $1000 for exactly the same product.

    • frodolives35 says:

      The tv ads start out all you need is a checking account…. They prey on people living check to check with no credit and are about the same as a payday loan scam.

    • witeowl says:

      It’s worse. They weren’t renting. It was more like lay-away with extremely high interest and an agreement that stopping paying forfeits all payments to date. They would only see the computer after paying about three times the value of the computer.

  13. shepd says:

    So, let’s hear from the canucks–Who wants MDG to go out in flames, too? I’d throw in The Brick for good measure, but they don’t just do electronics.

  14. Major Annoyance says:

    Now they need to go after Rent A Center. They’re doing exactly the same thing.

    • doctor_cos wants you to remain calm says:

      And Aaron’s. $1800 for a $400 laptop. WithOUT the Windows 7 upgrade. Oh, it’s $900 if you “don’t miss a payment” for 9 months.

      What happened to banks lending money to people for stuff like this, short term loans, promissory notes?? I remember doing that kind of thing with my old bank when I was younger for “emergencies” and such. Seems to me the interest rates were a lot better than what paycheck loan ‘services’ offer.

  15. PsiCop says:

    Unfortunately for all of BlueHippo’s “marks” … i.e. people who gave them money hoping someday to get a computer from them … they just went from having a small chance to actually get one, to creditors in a bankruptcy — who will end up behind government jurisdictions owed taxes, banks owed loan money, vendors owed payment for services, and of course batallions of lawyers employed by both BlueHippo and all those other parties, all of whom will definitely be handsomely paid even if no one else ever sees a dime.

    In other words, they are now worse off than they were previously.

    • Kitamura says:

      Well, any existing customers would be worse off, but maybe it’ll keep anyone else from trying to become a new customer. I wonder how much chance the existing customers had in the first place. Someone else’s post seemed to indicate that they were already at least a million plus in the shitter this year even without having their accounts frozen.

    • Trai_Dep says:

      You’re working WAY to hard to find an excuse to let Blue Hippo thrive. Really.
      Come to think of it, pimps hosting stables of underaged runaways DO feed their girls, so we should leave them alone, too? Otherwise, who’ll feed the children. The children!

      • PsiCop says:

        Actually I’m not suggesting they “thrive.” I’m just suggesting that, while BlueHippo going into bankruptcy sounds like poetic justice, it’s not entirely so. What would be better would have been for them to have been placed in receivership over their fraudulent behavior. This would have allowed as many orders to be placed as possible, depending on what’s left of the company. Then the people in charge should be trotted off to prison.

        Bankruptcy, on the other hand, puts their customers at the end of the list and essentially turns BlueHippo into a massive feeding trough for a whole raft of lawyers.

        • Trai_Dep says:

          I’m still struggling to see how keeping a predatory company going is a good thing for consumers. It fails the Greater Good test. Arguing otherwise seems quite Corporatist.
          And, I didn’t realize that lawyers always work pro bono in receivership cases.

          • PsiCop says:

            Lawyers never work pro bono … ever, anywhere, not that I ever knew of anyway. (I know, there are stories that they do … but again, I’ve never actually seen it, and while I actually know a few lawyers, not a single one of them has ever done anything pro bono.)

            The point of receivership is, there is still a company with some financial and operational remnants that could run out as many orders as possible before shutting down. It doesn’t mean the company stays going forever … it means it runs itself out as effectively as possible before the lights are turned out and the people who run it arrested for theft.

            Also a receivership requires only one lawyer. Bankruptcy requires many … a trustee as well as added legal counsel for all interested parties.

            Bankruptcy, on the other hand, clamps a lid on the cashflow and pretty much terminates anything in the pipeline. It also puts the customers at the end of the recovery line instead of at the front. These people have already been preyed on by BlueHippo. Why swipe away from them any opportunity they might have had, either to get their money back or actually have a computer delivered?

            It’s curious that the option here which was exercised … i.e. bankruptcy … just happens to be the one which employs more lawyers. Hmm. Wonder who made that decision? Could it have been … lawyers?

            What a service to humanity they provide.

            • tsukiotoshi says:

              As someone who will be a lawyer in 6 months, this post makes me sad. If you mean that lawyers never work pro bono in receivership cases then yeah, I agree with you. Why work for free in a receivership when you can get paid? Lawyers have bills to pay, too. On the other hand, lawyers often work pro bono in criminal and civil cases for indigent clients or for causes they believe in. Some jurisdictions even require pro bono work.

              Bankruptcy is often legitimately the best choice from the corporation’s standpoint. You get protection from creditors and some leverage in your favor in trying to make a new corporate plan if your corporation could still theoretically be viable. If the court decides you really aren’t viable then you still get help dealing with your creditors. I guess I can’t compare this with receivership as you are suggesting it because I actually was not aware that you could do a receivership without being in bankruptcy. I only ever learned about receivership in the context of Chapter 11 bankruptcy in my Bankruptcy class.

              In any case, my point is that there are certainly benefits to bankruptcy and legitimate reasons to file beyond unscrupulous lawyers trying to con their clients out of money.

              • Trai_Dep says:

                Yeah, don’t fret.
                He’s one of those guys that reflexively complains about all attorneys. Except for corporate lawyers inflicting harm on consumers, that is.
                Until he needs one. Then HIS attorney will prove the exception.
                Which will justify his complaining about evil lawyers twice as loud, and often.

    • StanTheManDean says:

      Damn, you just described the Lawyer Full Employment Act of 2009.

      Sleaze bag, scum sucking lawyers always get theirs.

      • TouchMyMonkey says:

        Yeah, lawyers suck, that is, until you need one.

      • tsukiotoshi says:

        I wish that was a real thing. In reality the legal industry has collapsed upon itself and this years crop of lawyers have very few job prospects. We have no scum to suck, alas!

  16. henrygates3 says:

    Here’s how I see this ending. BlueHippo files bankruptcy, the accounts are unfrozen and assets are liquidated to pay creditors because they are millions in debt. A small class action lawsuit pops up that BlueHippo settles out of court for, of course denying any wrongdoing. The company is fined by the FTC and BlueHippo goes away. The FTC gets some change from the fine, the lawyers make out like bandits, and BlueHippo’s executive staff either retire to the Bahamas with the millions they bilked from customers or move on to the next scam, PurpleWalrus computer credit.

    • henrygates3 says:

      Oh, and all the customers get letters telling them they are the winning party of a class action lawsuit, and anyone who bothers replying gets 10% a computer from BlueHippo’s distributor, which none of them can afford anyway.

    • Trai_Dep says:

      Gosh, you’re right.
      I guess no one should ever sue evil companies. Ever.
      THAT’LL school them lawyering lawyers!

      • henrygates3 says:

        Right. Because I think that most class action lawsuits benefit lawyers instead of consumers and only factor in to a company’s cost of doing business, I’m obviously against all forms of lawsuits.

        • Trai_Dep says:

          Oh. So it’s okay for companies to hose millions of consumers, so long as the individual amount is less than what it makes sense for us to individually hire a lawyer and sue Evil Corp in an isolated fashion. As inefficiently and riskily as imaginable.
          Good to know!

  17. rpm773 says:

    Ack! Reading this article just reminded me that my next weekly payment for my Blue Hippo PC is due tomorrow. Thanks, Consumerist!

  18. UIS4821 says:

    No freaking kidding! Yet, again if it seems to good to be true it probably isn’t.

  19. Snarkysnake says:

    Tsk , Tsk , so much moralizing and righteous indignation.

    There is a retailer that sells computers with a no nonsense ,low everyday price and has a fairly liberal return policy , operates in most communities and attempts to liberate the poor and uneducated from the grip of crooks like BlueHippo…And you people (most of you) hate them even more. Perceptive readers will realize that I am referencing Walmart.They are the antimatter BlueHippo. But because they don’t lose money or do any financial razzamatazz , they are reviled.

    I have prepared a FAQ about this paradox It follows.

    Q : Why do Consumerist readers/bloggers get their panties in a wad when compaies/scum like BlueHippo rip off customers (who are predominantly poor and financially unsophisticated) yet want Walmart to shut down and distribute money (and lifetime healthcare and free Pontiacs) to employees,women and minorities ?

    A: Because they are hypocrites.

    Q: BlueHippo sometimes didn’t even provide a promised computer when paid for. Walmart frequently sells them out the door for less than a month’s payment to BH. What gives ?

    A: Well , WalMart is a reputable (if imperfect ) retailer . BlueHippo is (was) a den of crooks.

    Q: Won’t shopping at WalMart hurt the interests of women ,minorities and WalMart employees ? After all , don’t lower prices kill local businesses and cute puppies ?

    A: If the local business is run like BlueHippo ,(and many rent-to-own places are),they should probably just give up and throw their lot in with whomever promises to save them from WalMarts rapacious “lower prices” policy.

    Q: So let me get this straight. Walmart LOWERING prices and expanding selection and availability is bad,but BlueHippo raising prices into the stratosphere and selling obsolete merchandise sight unseen is also bad. I’m confused.

    A: Me too. But I’m sure that someone will tell us that we are not capable of understanding why lower prices are good for us. Lets watch the replies.

    Q: Are these damn questions just a way of pointing out the effete snobbery of the asshats that hate WalMart but don’t just admit their bias against Wally’s customers ?

    A: Probably.

    Q:Thank you ,Mr. (or Ms.) Snarkysnake

    A: My pleasure.

    • henrygates3 says:

      This isn’t black and white. BlueHippo would have been fine had it just delivered the dang computers like they were supposed to.

      Walmart doesn’t just sell cheap crap. They move in to a region, undercut all their competitors by selling at a loss and then put everyone out of business.

      • Coles_Law says:

        Not always. Around here, most of the local grocery stores are cheaper than Walmart. Our downtown area is doing just fine. It is possible to compete with Walmart. I won’t be nominating their CEO for sainthood anytime soon, but they’re not always the pasteurized processed evil they’re made out to be. Their $4 generic prescription program helped a lot of people.

      • David in Brasil says:

        It’s not quite that simple, either. Like Ben Stein pointed out once, when WalMart moves into an area, everyone in town (except for competitors) gets a 10% raise.

        • Trai_Dep says:

          Citing Ben Stein weakens your argument more than you realize.
          Care to cite any reputable sources (John Stossel or Geraldo Rivera, sadly, don’t count)?

    • morlo says:

      Bluehippo sucks and Walmart sucks. That is not a paradox.

    • witeowl says:

      I suppose if you’re ok with twenty business owners turning into ten greeters and cashiers, five unemployed people, and five premature retirees, then I guess your point is well taken. Personally, I’d rather have the option of buying from a cheap place OR buying from a more expensive store with more knowledgeable staff, higher quality merchandise, and greater variety. With Wal-mart (and many other mass merchandisers), the choice is taken away as smaller competitors are driven away. I won’t go into the producer-side issues because they are, indeed, too murky. (Would I rather have a child in a third-world country earn the equivalent of a quarter for a full day of back-breaking labor to make my cheap sneakers… or have that child have no work options and land in prostitution?)

      Hating both Blue Hippo and Wal-mart for their respective evils, however, is not hypocritical in any way. I’m not sure I even understand how you claim that it is. They aren’t opposites, forcing one to revile one and adore the other. It’s not an either-or. We can, and I do, express disgust for their respective wrong-doings.

      That said, I will say that Blue Hippo beats Wal-Mart on the evil scale by a massive landslide. If using animal models of evilness, Wal-mart would be an annoying mouse to the raging hippo. (Rent-a-center would be a decent-sized cow.)

    • mythago says:

      Why write PR for WalMart for free? It’s like you’re writing WalMart fanfic, but I can’t fathom why you’d do so on a thread about BlueHippo.

    • Trai_Dep says:

      Similarly, classroom, please discuss: is it better to have three rabid, starving ferrets shoved down the front of your pants (presoaked in meat tenderizer) or to be staked on an army ant-hill by your unmentionables (glazed by an appetizing coating of honey)?
      …Something of a Straw Man, no?

    • Dutchess says:

      This is true, except when you go into Walmart and put down your money you actually get a computer. At walmart you don’t go in and have a 75% chance of getting home and realizing there’s nothing in the bag they gave you.

      Walmart wont continue to charge your credit card every month despite canceling your service and then never send the product they promised you.

      So, save your ritious indignation for our comments.

  20. ap0 says:

    Looking at their website, I see that to log in, it requires a username and password — except the username is your SSN. Good business practice!

  21. Snarkysnake says:

    Stossel’s stories hold up. He corrects when corrected. There is nothing wrong with his reporting.You just don’t like his findings. For bonus points ,read one of his books. Hell ,read ANY book.

    Stein has never pretended to be a journalist. I enjoy his columns (that btw are clearly labeled opinion). Again pick up one of his books ,and (before you burn it because you don’t agree with it) ,read it. It might make you chuckle. And please be careful with the matches and kerosene.

    Geraldo Rivera is a parody of…Geraldo Rivera. Back when he was young and hungry ,he did some good work (mostly on channel 7 in New York) . Sadly ,that was a long time ago.Now he just sits there like an old nag that needs to be retired.

    Again with the condescension. Is it okay if we listen ,read and decide for ourselves who is credible and who is full o’ shit ? Pretty please ?

    • treimel says:

      It’s a shame about Geraldo–his report on conditions in the Willowbrook school was muckracking in the best sense of the word. Sadly, that Gerlado is long gone.

  22. parrotuya says:

    Good riddance!

  23. mariospants says:

    Couldn’t have happened to a nicer hippo.

  24. Loias supports harsher punishments against corporations says:

    Sounds like a previous post about a woman who had her bank account frozen because she didn’t pay some debt. Moral of the story: having your bank account frozen results is serious issues.

  25. gman863 says:

    I feel little sympothy for BlueHippo’s “victims”. If your money management skills suck to the point you allow a company to automatically pull thirty bucks a week from your checking account for an obsolete PC, it’s doubtful you’ll notice the $35 a week ovedraft fee your bank tacks on each time your account comes up short.

    Ditto for rent-to-own customers. A former brain-dead co-worker asked me to replace a dead hard drive in a $400 PC she now “owned” after paying over $1300. It cost $50 for the drive plus $100 to replace the counterfit Windows XP license with a legitimate one that could be activated.

  26. chocotaco says:

    First Bluehippo, next chickenbitch.com

  27. dmflue says:

    Now I understand why I have not received my all in one printer that I have been waiting for since September. Whenever I called I kept receiving a different delivery date from Blue Hippo customer service. Then when asked to speak to someone else in authority that was not possible.As of Sept. 23rd according to MARITA everything was in order. My last delivery date was set for December 29th. Todate there is still no sign of the printer. I had 238 dollars or so of credit. I sent my money order for shipping and handling only back in September as stated before, plus i still had a balance and product reference numbers for other items that I had attempted to order. All the confused conversations I had , I felt it just did not sound right or make sense. Is there a way to recover or what? This is really a shame what they have done to people.