FTC sees red, BlueHippo owes green

BlueHippo advertised its services as a way for consumers with bad credit to finance the purchase of personal computers and other consumer electronics. According to consumer complaints, it didn't follow through on those promises.

Now, BlueHippo Funding LLC and BlueHippo Capital LLC owe up to $5 million for consumer redress to settle Federal Trade Commission charges that the firms allegedly broke an impressive list of rules, including the FTC Act, the FTC’s Mail Order Rule, the Truth in Lending Act, Regulation Z, the Electronic Fund Transfer Act and Regulation E.

According to a press release outlining the FTC complaint, BlueHippo "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 biweekly payments ranging from $36 to $88." But those credit offers frequently turned out to be little more than empty promises. "Many consumers who ordered products paid hundreds of dollars and received nothing in return, the complaint alleges."

Customers allowed BlueHippo to make automatic, periodic debits from their bank accounts in order to fund the product purchases, with BlueHippo promising to make a delivery once the customer had made 13 weekly, or seven biweekly, payments.

Customer complaints show that BlueHippo failed to deliver its products as promised, even after the necessary payments were made. Kisha from Atlanta writes on the Web site Ripoff Report that she expected a computer delivery from BlueHippo after her final installment of on time payments. "Four to six weeks after that my computer should have been in my house by the end of November 2007. It is now Dec. 11 and I still have no product. I have called them on five different occasions and each time I call, I have been given the runaround," she says.

In addition to complaints about not providing merchandise, the FTC press release says BlueHippo often took money out of consumers' account without first explaining that consumers would not be entitled to a refund even if they canceled before delivery for any reason.

Under the proposed stipulated final order and settlement, BlueHippo is prevented from misrepresentations in the marketing of consumer electronics and owes the monetary judgment of up to $5 million. That money "will be used to provide redress to consumers who entered into contracts with the defendants before March 2006, made payments, and did not receive the ordered products, refunds, or other restitution," the FTC press release says.

Another post on Ripoff Report noted the consumer's credit report showed an unpaid debt to BlueHippo. Consumers should be aware that they have the right to challenge any credit report errors, with the credit reporting agency required to remove any disputed information that cannot be verified.

A call to BlueHippo's press line for comment was not returned before this blog was published.