BlueHippo agrees to settlement

The Baltimore Sun

BlueHippo Funding LLC, a Woodlawn-based national company that has been a lightning rod for consumer complaints and federal and state investigations, agreed yesterday to a settlement with the Maryland attorney general's office that assures Maryland consumers get money back for electronic goods they never received or for which they were overcharged.

Attorney General Douglas F. Gansler estimated the restitution could cost BlueHippo close to $1 million, and the computer sales and finance company also must pay $300,000 to the attorney general's Consumer Protection Division.

The settlement resolves allegations that the firm and owner Joseph K. Rensin engaged in unfair and deceptive trade practices by selling computers, televisions and other goods for two or more times retail price and placing delivery conditions that prevented many consumers from receiving them at all.

"They get away with it, and they just get greedier and greedier," said Gansler. "They've been engaged in similar practices throughout the country, and we're the first state to hold them accountable. They are effectively shut down from conducting business as they have in the past, because of the agreement."

In a statement issued yesterday, BlueHippo did not admit or deny wrongdoing.

"BlueHippo voluntarily initiated a conversation with the attorney general's office almost two years ago seeking their guidance on our policies," said Andrew Campbell, BlueHippo's general counsel. "We are pleased that we have finally reached an understanding and agreement with Maryland about how Maryland views the application of its laws."

"Customer satisfaction has always been a top priority for BlueHippo," Rensin added in the statement.

BlueHippo markets computers and other electronic equipment nationally to consumers with poor credit. An estimated two-thirds of the company's Maryland customers never received the items they had ordered, according to Gansler's office. Consumers pay BlueHippo by electronic debits from their bank accounts, as often as once a week.

The Better Business Bureau of Greater Maryland helped 1,320 consumers with complaints about BlueHippo, said Kerri Kelly, its spokeswoman. Of those, 567 consumers were helped with their complaint last year, she said.

Maryland consumers who might be entitled to restitution will be identified from BlueHippo's records and do not need to contact Gansler's office.

David DeCamp, 44, of Frederick was stunned when Gansler's office called his cell phone yesterday to tell him that he would get back the more than $1,000 he paid BlueHippo over the past three years for a desktop computer that never arrived.

"I just gave up," he said. "I didn't know where to go. I didn't think there was anything I could do."

Margaret Harris, 68, of Baltimore, who had been paying BlueHippo since last year, received similar good news.

"I think it's really sad that they take advantage of old people," she said.

She said she is frustrated that BlueHippo still advertises on television, and that she doesn't get any satisfaction when she calls the number featured on the screen to check the status of her computer purchase.

"I see it every night," she said. "It makes me very upset. Here I am living on a set income. I don't even make $600 a month. They take my money, and they don't even send what they say they're going to send."

Still, a lawyer involved in a national class action lawsuit against BlueHippo criticized Gansler for not taking stronger steps.

"BlueHippo is headquartered in Maryland and victimizes consumers nationwide," said David J. Marshall, an attorney with Katz, Marshall & Banks, LLP in Washington. "I'm disappointed the attorney general has not taken action to halt BlueHippo's victimization of hundreds of thousands of consumers in other states which the company is left to continue to do with impunity."

Marshall is co-lead counsel in a lawsuit filed in March last year that he says is pending in federal court in San Francisco.

Gansler said he did not think stronger measures were needed.

"There's no reason to shut them down as long as in the future they don't conduct themselves in insidious, predatory ways," he said.

Marshall said yesterday's settlement will have little, if any, effect on the class action lawsuits that he and other lawyers have filed on behalf of other BlueHippo customers.

"They continue to operate, because their profit margin is incredibly high - a profit margin only achieved because they don't deliver merchandise to the great majority of people who pay hundreds of dollars to them," he said.

BlueHippo was sued by attorneys general in Florida and Illinois in 2005; both cases are continuing.

The Federal Trade Commission subpoenaed Wachovia Bank last year for records relating to BlueHippo and collected evidence from consumers. It declined to comment yesterday.

Sun columnist Eileen Ambrose contributed to this article.

An article in yesterday's Sun incorrectly described BlueHippo's response to a settlement agreement reached with the Maryland attorney general. The company's statement said that it acknowledges no wrongdoing.The Sun regrets this error.
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