McGraw wins case against BlueHippo

Bryan Cohen Jul. 20, 2011, 2:00pm


CHARLESTON, W. Va. (Legal Newsline) - West Virginia Attorney General Darrell McGraw announced on Wednesday that his office has obtained a judgment against BlueHippo Funding LLC and BlueHippo Capital LLC.

The circuit court of Kanawha County entered an order on July 13 permanently enjoining the BlueHippo entities from doing business in the state and declaring all BlueHippo contracts with state residents void, resulting in over $500,000 in cancelled debt.

Under terms of the order, consumers are not obligated to pay any amounts on their contracts with BlueHippo, regardless of whether the contracts are sold or sent to collection in the future. The order also holds that the bonding and registration requirements of the West Virginia telemarketing law do not violate the First Amendment and Equal Protection Clause of the U.S. Constitution. The district court for the Southern District of West Virginia previously ruled in a related case that the laws do not violate the Commerce Clause.

From 2003-2009, BlueHippo ran an extensive media campaign advertising the sale of computers on radio, television, internet and print media, McGraw says. The ads allegedly represented that "all you need is a checking account" and consumers could buy a "brand new name-brand computer" on terms that were affordable. BlueHippo, however, allegedly failed to disclose material terms of the transaction, including that consumers would be required to sign a written contract containing onerous terms, that payments were non-refundable and that if consumers ever made a late payment they would be required to pay for the computer in full before receiving it and would also be billed for any "free" merchandise offered as an incentive to purchase the computer.

Most consumers allegedly never received the computer or the promised free merchandise and the few who did received a computer that did not have the capabilities advertised and was technologically outdated. In 2007, McGraw sued BlueHippo for consumer protection violations and got a temporary injunction.

BlueHippo also did not register a as a telemarketer or post a $100,000 bond per telemarketing location as is West Virginia state law. Telemarketers must also have a refund policy allowing consumers to obtain refunds for returning goods or canceling services for a period of not less than seven days after the date of delivery to the consumer.

BlueHippo allegedly had a no-refund policy and refused to return payments to consumers who canceled their purchases. The company stopped doing business in late 2009 and both BlueHippo companies and approximately 50 related businesses, all owned by Joseph Rensin, filed for bankruptcy in Delaware in November 2009. While consumers may receive further contacts attempting to collect on the BlueHippo contracts in the future, the contracts are void.

"Consumers affected by this settlement should contact my Consumer Protection Division immediately if any debt collector attempts to collect under these unenforceable contracts," McGraw said. "Any attempt to collect on them violates West Virginia law."

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