A fast-growing Baltimore County company that has built a business using cable television ads to sell computers to people with poor credit is facing credibility problems of its own.
Dozens of unhappy customers across the nation have complained that they didn't receive their computers and have been unable to get refunds.
The Better Business Bureau of Greater Maryland has a thick file of customer complaints against the company, BlueHippo Funding LLC. The state attorney general's office in Baltimore also is looking at its practices.
Joseph K. Rensin, chairman and chief executive officer of BlueHippo, attributed the large number of complaints against the company to its large number of customers, who in a recent count topped 26,000.
"As a percentage of our sales, you have to understand it's a very small percentage," Rensin said in a recent interview. "If you haven't heard of us before, and then you hear 60 complaints, the antenna would go up. You can't make everyone happy, but we want to try. We work very hard to resolve every complaint as they come in."
BlueHippo's business model is a variation on sub-prime lending, a fast-growth area that serves people with less-than-perfect credit -- for a price.
BlueHippo customers are supposed to pay several hundred dollars into an account with the company before receiving promised computer equipment. Then they continue making monthly payments until the equipment is paid for. But many say they never got their computers or their money back.
The Better Business Bureau of Greater Maryland has documented and closed 23 complaints against BlueHippo since the company was formed in April of last year. An additional 37 complaints remain unresolved, said Tracy Bickel, a spokeswoman for the bureau.
"It's not unusual to receive complaints about a company, but this is a large volume to receive in a short time," Bickel said. "In six months, we have received 60 complaints."
Three things about BlueHippo quickly caught the attention of Nicholas G. Greaves, president of the Maryland bureau for the past eight years: The number of complaints was high for a fledgling business; the type of service was unusual because it was a company-generated layaway plan rather than something initiated by a customer; and the deductions began before a customer signed any paperwork.
In all the complaints the BBB has handled, it knows for sure of only one customer who received a computer, and it arrived significantly later than promised.
"We've already done the most we can do," Greaves said. "We've given BlueHippo an unsatisfactory report. People who go into our database or call us here hopefully are going to back away."
The number of complaints about BlueHippo went from four or five a month between July and November to double that number in December and more than quadruple that number in January, Better Business Bureau officials said.
"There seems to be some reluctance on their part to providing us what we've asked for," Greaves said. "Most businesses, if we bring to their attention that they have a process that is causing problems, they want to change it."
In stacks of complaints to the bureau, consumers complain that they did not authorize BlueHippo to make withdrawals from their bank accounts and that once the withdrawals started, it was hard to get the company to stop. Consumers also complained that they never signed contracts and were unable to acquire a copy of the contract upon request.
The attorney general's office in Baltimore has received 19 complaints about the company in the past year, 15 of which are open, said Rebecca Bowman, an assistant attorney general. Two of them have been mediated and resolved, and another two were filed for informational purposes only.
Bowman's office can bring civil enforcement action against a company if there appears to be a pattern to complaints, she said.
The Better Business Bureau has had limited success in its appeals to BlueHippo for additional explanations of its business practices. A Jan. 6 letter requested, among other information, a list of 200 satisfied customers and their contact information. No such list of contented customers has been provided.
Nor did BlueHippo respond to a reporter's request for a list of happy customers.
Rensin says he is troubled by each of the 60 customer complaints he has received and by the Better Business Bureau's perception that his company is not being responsive.
Rensin said he thinks the local Better Business Bureau office is understaffed, compounding a problem he sees in communicating with it in a timely manner.
"We are distressed about it," he said. "We'd like to have a better relationship with them, but it's only possible if they look at every complaint individually and our response to it. I'd welcome the opportunity to better explain who we are and what we've done to help these customers.
"We have our share of customers who decide they don't want to or can't make consistent payments," Rensin said. "If they did, they would be served by the likes of Wachovia and Wells Fargo and Citibank."
One of BlueHippo's less-than-satisfied customers is Catherine Leavenworth, a Connecticut resident who first saw the company's TV commercial in July and decided it offered the perfect way to buy a computer for her family in time for the holidays.
Her relationship with BlueHippo soured when a promised Dell computer didn't materialize despite the $490 she had paid in installments by Oct. 24, surpassing the $450 down payment she says BlueHippo required.
At that point, her computer was supposed to be shipped directly from the Dell factory along with the free accessory she had chosen, a scanner. She called BlueHippo to ask when she could expect her computer and was told it would take four to six weeks and that the computer would be shipped by UPS from Dell.
In the fifth week, Leavenworth called to check on the status of her computer and was told that her name was on a list to receive a computer Dec. 1.
Leavenworth grew suspicious when her computer hadn't arrived by Dec. 1. Additional phone calls to BlueHippo proved more disconcerting.
"What really got me suspicious was when they couldn't provide a tracking number," she said.
Leavenworth kept calling and got no satisfaction. Repeated promises of return telephone calls from top BlueHippo executives were broken. She thought she was being stonewalled.
Finally, Leavenworth alerted her bank to stop the automatic $72 debit from her checking account every two weeks. By then, BlueHippo had nearly $700 of her money.
"I'm out $700," she said recently. "I'm not a rich person. This was supposed to be a Christmas present for everyone in my family. I'm really upset about this."
During an interview with The Sun, Rensin said he was not familiar with Leavenworth's complaint and that he and his employees would research her case immediately. Her name was not among the 60 complaints that he voluntarily provided.
A day after that interview, Leavenworth said, her luck changed. Not only did she receive four phone calls from BlueHippo officials, but she also was told that she would receive a free scanner for her trouble.
The money she had paid BlueHippo was reinstated into her account the next day, Feb. 5, as promised by BlueHippo officials, and a scanner arrived from Dell on Feb. 6.
Mary Thatcher, a Blue Hippo customer in Cashmere, Wash., is still waiting for her computer. She made a $455 down payment and says BlueHippo stopped debiting her account after she complained about the company to the Better Business Bureau.
BlueHippo says that none of her debits since Sept. 15 have gone through because of insufficient funds.
Thatcher says the company once debited her savings account for three payments within a 10-day period. Two debits were for $82 and one was for $72.
Thatcher wants a refund but isn't optimistic.
"I want my money back," she said. "I can go buy a $500 Dell with that. I would never recommend this company to anyone."
BlueHippo's corporate offices take up a floor of an office building on Security Boulevard in Woodlawn. The 17,000 square feet of space is enough to grow to double its current size of 100 employees, Rensin said.
Rensin says he might expand beyond 200 employees and move to Baltimore. He said he also hopes to branch out into plasma screen televisions.
"We've had customers asking for them," Rensin said.
Less than a year old, BlueHippo was started by Rensin and Senior Vice President Bruce E. Mattare with eight employees . It has exceeded its growth projections threefold, Rensin said. The company was financed with $3 million and has a $10 million line of credit, he said. He declined to provide other financial details.
"This is substantially ahead of where we expected to be," Rensin said. "We're blown away by the growth."
BlueHippo spends about $650,000 a month on television and radio advertising nationally, Rensin said.
Typically, customers are ages 20 to 40 and spend about $1,300 on computer equipment that comes from companies including Dell, Gateway and Hewlett Packard, he said.
BlueHippo does not order computers in bulk because the company is not large enough, Rensin said. Instead, each computer is ordered and shipped directly to the customer from the manufacturer or a distributor.
Rensin said the company was conceived as a way of filling a niche that was not being served, people whose credit history would not allow them to buy a computer on traditional lay-away terms and who would often resort to rent-to-own plans as a financing method.
"If you treat people with respect and dignity and you understand the risks, there's a lot of opportunity out there," he said. "We want to be known as the kind of company that takes care of them."
Questions arise about zoo donations
Until recently, BlueHippo promised in a message on its Web site to give all proceeds from sales of hats, shirts, mouse pads and other items featuring its hippo logo to the struggling Baltimore Zoo.
"Every dollar goes to the Baltimore Zoo," Joseph K. Rensin, BlueHippo's chief executive officer said early in a face-to-face interview early this month. "We just write them a check. We bundle them up and pay them once a quarter."
Later in the interview, Rensin acknowledged that the zoo assistance program had been in place for only about a month and a half and that he wasn't sure the zoo had received any money from his company.
Zoo officials said they received a check from Blue Hippo the next morning for $1,002. They said they had had no previous contact with the company.