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Attorney General Abbott Charges BlueHippo Funding With Consumer Finance Fraud

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AG contends Maryland-based company misled low-income customers seeking computers

 

AUSTIN – Texas Attorney General Greg Abbott today charged a finance company with violating the Texas Deceptive Practices Act by failing to deliver computers and related equipment to purchasers – who were primarily customers with poor credit ratings.

According to the state’s lawsuit, BlueHippo Funding, LLC and its sole shareholder Joseph K. Rensin of Maryland never registered to conduct business in Texas. However, the defendants’ advertising targeted Texans with poor credit who wanted computers, but whose limited financial resources led them to use the defendants’ “law-away plan.” Other defendants named are BlueHippo Capital, LLC of Virginia and Nevada.

In addition to today’s state enforcement action, which was filed in Travis County District Court, the Texas Attorney General’s Office is working closely with the Chapter 7 liquidating trustee that was recently appointed in the defendants’ Delaware bankruptcy case. By pursuing recoveries in state and federal courts, Texas is working to improve the likelihood that consumers’ restitution claims will be fulfilled.

The defendants advertised a toll-free number and Web site where customers seeking to purchase a computer would be guaranteed financing, regardless of credit. Potential customers were told that they would be required to make a certain number of layaway payments. Those payments would purportedly secure the buyer’s right to purchase their computers, and BlueHippo would finance the remaining balance.

However, the defendants failed to disclose several consequences until after customers signed layaway plans – plans that could financially damage them. According to customer complaints received by the Office of the Attorney General, the company failed to ship computers as they were contractually obligated to do, even though customers made the required number of consecutive layaway payments. Complaints also indicate the defendants failed to ship, as promised, certain “free” products, such as printers, software and televisions.

Some customers repeatedly contacted the defendants by phone about BlueHippo’s failure to deliver the partially purchased products. As a result, customers became frustrated, canceled their orders and requested that the defendants fully refund them. Instead of refunding customers’ installment payments, however, BlueHippo referred customers to a clause in the layaway plan stating that cancellations would merely receive a “store credit.”

After tiring of the defendants’ duplicity, customers grew so frustrated that they notified their banks to stop BlueHippo’s automatic debit withdrawals from their checking accounts. However, BlueHippo claimed that customers who stopped automatic withdrawals were subject to “default” provisions in the “retail installment contract,” which the defendants claimed allowed BlueHippo to increase interest rates to 24 percent, or the highest interest rate allowable by law.

Worse, the company maintained that the contract permitted it to continue withdrawing payments from customers’ accounts. As a result, the defendants essentially used the customers’ stop payment instructions as an excuse to increase interest rates and therefore simply ignored customers’ clear instructions to the contrary.

The attorney general seeks civil penalties against these defendants of up to $20,000 per violation of the Texas Deceptive Trade Practices Act, as well as restitution to financially harmed consumers.

Texans who believe they have been deceived by similar fraudulent business practices are encouraged to call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.texasattorneygeneral.gov.

 


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