Feeds

Subprime PC retailer coughs up $5m fine

BlueHippo tramples on the poor

The Essential Guide to IT Transformation

BlueHippo bills itself as a company that has "helped thousands of Americans with limited financing options purchase computers, flat screen televisions, and other electronic equipment". This may be true. But it's also worth noting that BlueHippo will soon fork over as much as $5m to settle Federal Trade Commission charges that an unspecified number of Americans have paid the company hundreds of dollars in exchange for absolutely nothing.

Since its inception in 2003, BlueHippo has aimed nationwide television and radio ads at people with "less than perfect credit, bad credit, no credit," offering a shortcut to certain electronic goodies. With a quick phone call to the company, credit-challenged Americans could arrange for the delivery of a brand new PC simply by agreeing to a roughly $100 down payment and a year's worth of weekly or biweekly payments somewhere between $36 and $88.

During such calls, customers were told that their PCs wouldn't arrive until the company lifted thirteen weekly or seven biweekly payments straight from their bank accounts. But prior to March 2006, the FTC says, BlueHippo wasn't exactly upfront about its refund policy - which didn't allow refunds.

"The company did not adequately disclose that if you stopped making payments - for any reason whatsoever - you didn't get any of your money back," Frank Gorman, an FTC attorney who worked on the case, told The Reg. "This is not what consumers would reasonably expect. These non-refunded payments were in fact consumer injury."

BlueHippo did make some sort of over-the-phone statement about its refund policy. But Gorman says it was "wholly inadequate." "It was rushed. It was confusing. It was not enough to overcome what people expect from a situation like this."

The company also sent customers a printed sales verification form that included a disclosure - and customers were required to sign and return it. But, the FTC alleges, this form didn't arrive until money had already changed hands.

"People were told to look out for this sales verification form," Gorman says. "But when it showed up, payments had already been debited from their back accounts. They learned that payments were non-refundable after they'd already made them."

Blue Hippo

Blue Hippo's Blue Hippo

As Gorman points out, BlueHippo changed its policies in March 2006. But thanks to today's settlement, customers that predate this policy change now have to a right to refunds as well. The company will fork over at least $3.5m, and the total pay out could reach $5m.

Under the settlement, BlueHippo is also required "to stop collecting money from purchasers who are entitled to redress, to stop furnishing derogatory information about such purchasers to credit reporting agencies, and to notify any agency to which they have provided such information that the person’s account is in good standing."

The FTC won't tell us how many BlueHippo customers are entitled to redress payments. But as of June 2007, more than 1,400 people representing all 50 states had complained to the Better Business Bureau.

Whatever BlueHippo ends up paying, the company is "very excited" about its settlement with the FTC. "The FTC staff was fair and professional, and after months of hard work we have fashioned a deal that satisfies all parties," said a canned statement from Andrew Campbell, BlueHippo general counsel. "We are very excited about this settlement. The FTC is our only national regulator and the country's most important consumer advocate."

The company wouldn't tell us why it's called BlueHippo. ®

Build a business case: developing custom apps

More from The Register

next story
4K video on terrestrial TV? Not if the WRC shares frequencies to mobiles
Have your say with Ofcom now, before Freeview becomes Feeview
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
You didn't get the MeMO? Asus Pad 7 Android tab is ... not bad
Really, er, stands out among cheapie 7-inchers
Apple winks at parents: C'mon, get your kid a tweaked Macbook Pro
Cheapest models given new processors, more RAM
YES, iPhones ARE getting slower with each new release of iOS
Old hardware doesn't get any faster with new software
Leaked Windows Phone 8.1 Update specs tease details of Nokia's next mobes
New screen sizes, dual SIMs, voice over LTE, and more
Microsoft stands on shore as tablet-laden boat sails away
Brit buyers still not falling for Windows' charms
Nintend-OH NO! Sorry, Mario – your profits are in another castle
Red-hatted mascot, red-colored logo, red-stained finance books
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.