Blue Hippo Sued by FTC; Only One Computer Sent While $15 Million Was Pocketed in Layaway Fees
Hat tip to Prometheus 6, which famously insists, “Don’t lie on Black folks, don’t lie about Black folk,” and “Don’t lie to Black folks.”
You’ve probably seen commercials by a company, Blue Hippo, claiming that it would allow consumers to buy brand-name computers on layaway. I have. I even thought about looking into Blue Hippo for buying a desktop or a laptop computer. The company was flogging its services everywhere, from New York, to Georgia, to Wisconsin, daily and even late at night.
But then, I found other opportunities where I could get a computer: Best Buy’s clearance outlet on eBay; WalMart, and CraigsList. In these hard times, layaway is particularly attractive for many who have lost their credit standing or who don’t have a credit card. But unlike stores like K-Mart, Sears, Burlington Coat Factory, Marshall’s, Toys-R-Us, TJ Maxx, and at eLayaway, the FTC says that Blue Hippo consistently didn’t come up with the goods. Its customers are still waiting for their computers. In short, it was indeed like taking candy from the poor.
The Federal Trade Commission (FTC) has had it with the company, which offers computers on layaway to those too poor to buy one outright. Buyers put up $99 to $124 in down payments, then make regular payments of $36 to $88. After 13 of these payments, the company says it will send out a computer, while the payments continue until the balance is paid off.
Unfortunately for the friendly folks at BlueHippo, the FTC smelled a scam. People were simply not getting machines, and BlueHippo’s “cancelation policy” required people to send in prepaid money orders first even if their account had enough money to cover the necessary fees–not allowed under FTC consumer protection rules. In 2008, BlueHippo settled with the agency. Under the terms of the deal, BlueHippo would pay up to $5 million into a “consumer restitution pool” to reimburse those who had been burned
According to the FTC, the company’s brazen business model continued without interruption after the 2008 settlement. “In fact, in the year following entry of this Court’s Stipulated Final Judgment and Order for a Permanent Injunction, BlueHippo financed—at most—a single computer to the over 35,000 consumers who placed orders for computers that could be financed during the period,” the FTC told a court yesterday. In the meantime, the company took in a cool $15 million in payments from consumers, who don’t appear to have received anything in return.
You certainly can’t believe everything you see on TV. Skip Blue Hippo as a company to which you can trust your dollars.