Texas AG Takes Legal Action Against Blue Hippo Over Consumer Fraud Complaints

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.

The customers, who were primarily people with poor credit ratings, had agreed to purchase computers through “Blue Hippo,” a company that advertises heavily on television, offering computers on payment terms.

According to the legal action taken by the state, Blue Hippo Funding, LLC and its sole shareholder Joseph K. Rensin of Maryland never registered to conduct business in Texas. Despite that, the company’s advertising, targeted Texans with poor credit who wanted computers, but whose limited financial resources led them to use the defendants’ “law-away plan.”

“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,” the AG’s Office said in announcing the legal action. “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 Blue Hippo’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, Blue Hippo 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 Blue Hippo’s automatic debit withdrawals from their checking accounts. However, Blue Hippo claimed that customers who stopped automatic withdrawals were subject to ‘default’ provisions in the ‘retail installment contract,’ which the defendants claimed allowed Blue Hippo to increase interest rates to 24 percent, or the highest interest rate allowable by law,” the AG’s Office noted. “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 is seeking penalties against Blue Hippo of up to $20,000 per violation of the Texas Deceptive Trade Practices Act, as well as restitution to customers were financially harmed.