CHARLESTON - Attorney General Darrell McGraw has filed a lawsuit against BlueHippo, claiming the company caused several West Virginia consumers to lose money.
BlueHippo is a financial company that provides computers and other equipment to people, regardless of their financial credit. Consumers provide a one-time fee to establish credit with BlueHippo and then pay for their purchases using a 52-week layaway system. The weekly payments are withdrawn straight from the consumer's bank account.
However, in the suit filed March 12 by McGraw, consumers claim to have paid for equipment they never received, or did receive but that did not work. Also, some consumers paid prices much higher than they would have paid at a store.
A news release from McGraw states one consumer paid about $1,800 for a computer similar to one she bought at a national retail store for $400.
According to the lawsuit, BlueHippo does not have any inventory and does not ship computers. The company accepts payment under financing agreements and layaway plans. After a consumer has paid BlueHippo all or part of the money owed, the merchandise is ordered from a supplier, like Dell or Gateway.
"BlueHippo does not purchase a computer and have it shipped to a consumer until the consumer has paid an amount sufficient to cover BlueHippo's cost of purchasing the computer from a manufacturer and a certain amount of profit," the suit says.
McGraw also claims BlueHippo promised "top-of-the-line," "brand name" computers, but no brand name is ever mentioned in the advertising. BlueHippo also promised "free" items, such as printers and digital cameras, which many consumers never received.
Also in the suit, McGraw claims BlueHippo acted as a telemarketer without first having registered with the secretary of the department of tax and revenue.
At the end of a telemarketing call, after the consumer has verified addresses, bank information and other personal information they are told all payments are nonrefundable, the suit says.
McGraw also claims that those consumers who make payments, then never receive their equipment and stop payments are not issued a refund for the payments they have already made.
In the news release, McGraw warns about buying from infomercials, a common way of advertising for BlueHippo.
"Consumers should always be wary of ordering merchandise in response to television infomercials," he said. "Telemarketers are required to tell you their refund policy and all material terms of the agreement before they take any payment."
In an 18-count suit, McGraw seeks an injunction, stopping BlueHippo from doing business in West Virginia. McGraw also seeks a $200,000 bond from the company and $5,000 for each violation of the West Virginia Telemarketing Act, all to be paid to the state within 10 days of receiving the orders.
The suit, filed in Kanawha Circuit Court, names BlueHippo Funding, a Maryland limited liability corporation; BlueHippo Capital, LLC, a Nevada limited liability corporation and Joseph Rensin, the manager of BlueHippo Funding and BlueHippo Capital.
Senior Assistant Attorney General Charli Fulton is counsel for the case, which has been assigned to Judge Tod Kaufman.
Kanawha Circuit Court case number 07-C-438