The FTC Finally Puts a Stop to the BlueHippo

The Federal Trade Commission (FTC) has had it with BlueHippo, which offers computers on layaway to consumers too poor to buy one outright. Buyers put up $99 to $124 in down payments, and then make regular payments of $36 to $88. After 13 of these payments have come in on time, the company claims it will send out a computer, while the payments continue until the machine is completely paid off.

Unfortunately for BlueHippo, the FTC smelled a scam. People were simply not getting machines, and BlueHippo’s “cancellation policy” required people to send in prepaid money orders first, even if their account contained enough money to cover the necessary fees, something not allowed under FTC consumer protection rules. In 2008, BlueHippo settled with the agency, however and under the terms of the deal, BlueHippo would pay up to $5 million into a “consumer restitution pool” in order to reimburse those who had been burned. At the time, BlueHippo seemed content with the judgement.

But according to the FTC, the company’s brazen business practices continued without any interruption after the 2008 settlement. In this time, the company took in a cool $15 million in payments from customers, who never received anything in return. So in April 2009, the FTC went back to the court, complaining about the continued problematic behavior and seeking further penalties.

At this, BlueHippo suddenly started shipping computers. This didn’t impress the FTC, which points out that 2,594 of the customers who received machines had not even met BlueHippo’s financing criteria. The company also failed to do basic things like file the FTC reports it had agreed to as part of the agency’s oversight.

Finally, it seems that the FTC has had it.  Today, the agency went back to court asking a federal judge for a contempt order against BlueHippo. Courtesy of arstechnica.com