Scammy Computer Seller BlueHippo Settles With FTC For $5 Million

BlueHippo, the scammy “no credit check” computer seller accused in several states of taking money from customers without providing the computers and other electronics it supposedly sells, has settled with the FTC for $5 million. They did not admit wrongdoing.

From the Baltimore Sun:

BlueHippo will continue to operate, despite probes in several states – including Maryland, where a settlement has been reached – and a class-action lawsuit by customers.

Federal regulators said they were happy with the outcome.

BlueHippo is accused of enforcing an unfair “no refund” policy on consumers, and refusing to ship items in a timely fashion. When consumers tried to cancel, BlueHippo kept their “pre-payments.”

Specifically, the FTC alleged that by failing to ship merchandise in a reasonable time frame or denying consumers the right to cancel and get a refund, BlueHippo violated the FTC’s mail-order rule. Officials said the company also might have violated the federal Truth in Lending Act and its regulations by not giving consumers written disclosures before the transactions were made.

The commission also alleged that the company violated the Electronic Fund Transfer Act and its regulations by offering credit on the condition of repayment by preauthorized debits.

The FTC settlement bars the company from misrepresentations in the marketing of consumer equipment requiring more than four periodic payments. In addition, the company must fully disclose terms of refunds, cancellations or exchanges.

The FTC’s action does not address one issue that drew criticism at Maryland’s settlement last spring and elsewhere – the high cost of the computers. The company charged several times the retail price for the equipment, according to other settlements.

Founded in 2004, BlueHippo now describes a policy on its Web site that gives customers a cash refund within seven days of signing up and store credit for canceled purchases that can be redeemed by purchasing products on bluehippo.com.

Retailer settles FTC suit over PCs [Baltimore Sun] (Thanks, SwatLax!)