The Federal Trade Commission (FTC) has lodged contempt charges against BlueHippo for violating a 2008 court order by continuing to deceive thousands of financially strapped consumers with phony promises that it would help them purchase a computer even if they have credit problems. The company also operates under the name "Digital Boulevard."
Last year alone, BlueHippo took more than $15 million from consumers who were told the company would finance their new computer purchase, but never received the financing or the computers. Less than one percent of consumers who signed up with BlueHippo actually received the financed computers they applied for, and many discovered that the company’s “store credits” were rigged to discourage consumers from using them.
BBB issued a nationwide warning about BlueHippo back in 2007. The BBB serving Greater Maryland (where the company is based) has processed more than 4,100 complaints against BlueHippo in the past three years, 60 percent of which the company ignored. At least 4,500 Tennesseans, many of whom are on fixed or limited incomes and/or have poor credit, contracted with the company to buy computers. The Tennessee Attorney General filed suit against the company in October 2008.
The FTC’s contempt motion alleges that between April and December of 2008, more than 35,000 customers contracted for BlueHippo’s computer financing deal. But the company provided only one financed computer. The company offered consumers credit to finance personal computers and other consumer electronics with a low down payment and a year of weekly or bi-weekly payments of $36 to $88. BlueHippo promised to deliver the product once the consumer made 13 weekly payments. But even after they made all the payments, most consumers did not receive the computers they ordered in the time promised. The FTC contends that BlueHippo used deceptive marketing tactics, and violated the FTC Act and other federal credit statutes.
The FTC also accuses BlueHippo of hiding key aspects of its refund policy. The company did not offer cash refunds but promised that consumers who canceled their order after seven days could get store credit to buy desktop computers, laptops, monitors, software and televisions. But BlueHippo failed to tell consumers that they would have to send a money order to cover undisclosed shipping and handling fees, as well as taxes. Even if they had enough of this credit to cover all the costs, consumers could only order one item at a time.
In a video statement, FTC Chairman Jon Leibowitz said that “BlueHippo is a company with a business model based on deceit.” The related FTC news release includes Leibowitz’s warning that his agency is “putting companies like this on notice: If you mistreat consumers and thumb your nose at the courts, we will hold you accountable.”