FTC Lodges Contempt Charge Against BlueHippo, some local consumers affected

The Federal Trade Commission on Thursday asked a federal court to issue a contempt order against BlueHippo, a Maryland company that collected more than $15 million from consumers based on claims that it would finance their purchases of new computers. However, the FTC says for the most part, the company didn't deliver on the computers, which violates a 2008 court order.

The FTC says that less than one percent of consumers who signed up with BlueHippo received the financed computers they applied for, and undisclosed conditions to redeem "store credits" were rigged to discourage consumers from using them.

The FTC says that BlueHippo has flouted a settlement reached with the agency last year, continuing to deceive thousands of financially strapped consumers. It's asking the court to order BlueHippo to compensate injured consumers and to bar BlueHippo from doing the same thing in the future.

"Years of broken promises by BlueHippo have left consumers seeing red," says FTC Chairman Jon Leibowitz. "We're putting companies like this on notice: If you mistreat consumers and thumb your nose at the courts, we will hold you accountable."

In Savannah, I heard from two families that had problems with BlueHippo in the last year. The Currys ordered a computer, made all the required payments and then waited and waited for the computer to arrive. I emailed the company a few times and on the day I did an interview with the Currys, their computer arrived in the mail. However, other parts of the package, including a digital camera and printer were never received.

After the story on the Currys aired, I heard from Gary Muehlenbeck who said he got involved with BlueHippo after hearing an advertisement on the radio. He said he had paid a $99 fee up front and then made payments for three months. After that, Muehlenbeck said he was supposed to receive a laptop computer. But it never arrived. It still hasn't been received.

It's on behalf of consumers like the Currys and Muehlenbeck that the FTC has gone back to court. "We want redress for consumers, to the extent that it's possible," Peter Kaplan from the FTC told me.

In April of 2008, The FTC reached a settlement with BlueHippo. At the time, the company was required to pay $3.5 million and it was barred from continiut to deceive customers.

Kaplan says the FTC now charges that even after the settlement order, BlueHippo continued to deceive consumers, aggressively marketing itself as a computer finance company and that BlueHippo spent the rest of 2008 signing up customers and taking their money, but failing to provide them with financed computers.

According to a news release from the FTC, "Finally, in April, 2009, after the FTC notified the court that BlueHippo was violating the settlement, the company began ordering thousands of computers. Even so, the FTC alleges that BlueHippo failed to order computers for 1,015 of the 2,477 consumers who had qualified for financing by making 13 consecutive payments and completing the required paperwork. For the 1,462 consumers who finally received a computer, BlueHippo did not even order - let alone ship - the computers within the three- to four-week time frame the company had advertised. On average, it took about six months between the time these consumers qualified for their computers and the time BlueHippo ordered the machines, according to the FTC's contempt motion."

Kaplan says consumers who have had trouble getting computers should contact the Federal Trade Commission. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).