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Comments: 215 +-   BlueHippo Scam Collected $15M, Only Shipped One PC on Friday November 13, @09:59PM

Posted by Soulskill on Friday November 13, @09:59PM
from the was-it-alienware dept.
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An anonymous reader writes "Turns out that those BlueHippo commercials advertising financing for computers and other electronics for anybody, regardless of credit, were way more sleazy than you thought. The FTC is bringing this fraud down, but not too soon. 'According to the FTC, the company's brazen business model continued without interruption after the 2008 settlement. "In fact, in the year following entry of this Court's Stipulated Final Judgment and Order for a Permanent Injunction, BlueHippo financed — at most — a single computer to the over 35,000 consumers who placed orders for computers that could be financed during the period,' the FTC told a court (PDF) yesterday. In the meantime, the company took in a cool $15 million in payments from consumers, who don't appear to have received anything in return.'"
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  • Why bother? (Score:5, Insightful)

    by Renraku (518261) on Friday November 13, @10:00PM (#30094606) Homepage

    Why bother running a successful business with a plan when you can run a fake business and get the hell out of Dodge when it starts coming down around you? The customers, of course, will want their money back, but will probably get a 15% off your next purchase coupon, good until yesterday, while the lawyers will get a few million to settle.

    • Re:Why bother? (Score:5, Insightful)

      by Edmund Blackadder (559735) on Friday November 13, @11:19PM (#30094996)

      Your post was going well, but I do not know why you decided to blame the lawyers in the end. Class action lawyers are usually the only people these scammers are afraid of. Government agencies are slow and it is rather rare that they actually go out of their way to chase scams. It is great that the FTC decided to go after those bluehippo people, but this is a very rare occurrence.

      Usually when companies try to do something dodgy towards ordinary consumers they are mostly worried about the class action lawyers. Because there are lawyers out there that do nothing but look out for scams so that they can get their payday. Sure it usually ends up that the lawyers get a lot of the money and the scammed customers get a small check in the mail. But even if the lawyers get all the money they still take alot of money from the scammers and thus punish them, and that is actually a benefit to society.

      • Sorry, I don't believe it. Scammers don't run a solvent enterprise that a class-action lawyer would approach. The lawyer wants money, the scam is a scam, not an operating business, and doesn't hang around with money for a lawyer to recover.

        Do you have any good examples?

        • by ffflala (793437) on Saturday November 14, @02:27AM (#30095664)

          Milli Vanilli: they settled a class action lawsuit.

          A more recent example is the class action lawsuit brought against auto dealerships for refusing to disclose hidden points the added to financing charges. "Those few percentage points of interest that dealers add on for themselves - without telling the customer - is called "dealer reserve," and it can add thousands of dollars to the cost of buying a car." http://www.cbsnews.com/stories/2004/04/01/60minutes/main609870.shtml [cbsnews.com]

          Excluding scams from operating businesses seems to me an inaccurate distinction -- an operating business can be a scam. Just look at magnetic arthritis bracelets, or The Secret.

          My favorite is Excel Communications -- a wildly successful business that managed to beat Microsoft to become the youngest operating billion-dollar-annual company in history. Their MLM scheme was practically indistinguishable from any gifting club pyramid scheme. http://en.wikipedia.org/wiki/Excel_Communications [wikipedia.org]

          I do not know of any class action lawsuits against them, but believe there were a number of actions brought against them by state consumer agencies.

          • All of your examples where there was an actual class action suit are about companies that actually delivered products. Blue Rhino is a level of scam beyond these companies - their intent seems to have been to take money and not deliver anything. The point being that they have disbursed money which is now beyond collection through a class action suit. The Excell example is illuminating - nobody brought class action against them because they were bankrupt. Class action requires a large enough source of money to attract the attorney.
            • by DragonWriter (970822) on Saturday November 14, @04:42AM (#30096086)

              Strictly speaking your examples are talking about dumb-asses who didn't properly structure their businesses or scams to be successful. If you do it right you win unless the governemnt finds you, and that is only if it is an illegal operation. (I'm not condoning, just giving facts)

              Those aren't "facts", those are semantic games to carefully redefine terms in unusual ways so your original claim is true by definition, creating a nice, tight circular argument that means nothing.

        • Comeuppance. (Score:5, Insightful)

          by Web Goddess (133348) on Saturday November 14, @02:55AM (#30095746) Homepage

          People have god-given frailties, which scammers EXPLOIT by victimizing people's blind spots or weak points. Your post blaming the target of BlueHippo fraud was insensitive and cloddish. But you will mature over the next few years, and become more aware that humans who are *average* or even *below average* still deserve our respect. You, too, have your blind spots and two Achilles heels.

          Wendy / the Darwin Awards

  • Shocking! (Score:5, Interesting)

    by eihab (823648) on Friday November 13, @10:06PM (#30094626)

    I remember watching their commercials and going to their website to check it out. The fine print clearly stated that you will not receive their computer printer/combo/etc. until after you mail off the last payment!

    I thought to myself, who in their right mind would even consider giving this company a dime, but apparently there were 35,000 such individuals.

    The lesson here folks: if it's too good to be true then it probably is.

  • by fuzzyfuzzyfungus (1223518) on Friday November 13, @10:10PM (#30094644) Journal
    Not surprised that BlueHippo are a bunch of worthless subhumans; but that they would be so audacious about it.

    Had they actually shipped a few thousand bottom-of-range refurb Compaqs or whatever, which are pretty damn cheap by the pallet load, they never would have attracted fire from the FTC. The way that their "business" was structured(at least back when I checked their website when I first heard about them), they should have been able to clear fairly impressive margins on the backs of the poor and clueless even without cheating. And, if they had avoided legally actionable fraud, they presumably would still be operating today.

    Why would somebody do that? Is enforcement so weak that getting away with it is a rational expectation?
  • by NoYob (1630681) on Friday November 13, @10:10PM (#30094646)
    How about naming the asshole or assholes behind it? So that way, if we see those lying thieves we'll know to run. Many times, these guys close up shop and just start all over again with a different business entity.

    How many would invest with Bernie Madoff if he somehow miraculously got out of prison - regardless of the name of his company?

    • by TSHTF (953742) on Friday November 13, @10:19PM (#30094694) Homepage
      From the court documents linked in the article: Joseph K. Rensin is the sole owner and shareholder of BlueHippo Funding, LLC. FTC 26. Mr. Rensin acted as Chief Executive Officer of BlueHippo from its inception in 2003 until July 20, 2009. See FTC 28 at 7-8; FTC 22G at 3. As CEO, BlueHippo's corporate officers, including the Chief Marketing Officer, reported directly to Mr. Rensin. FTC 28 at 20-22. In addition, Mr. Rensin was involved in BlueHippo's day-to-day operations, "manag[ing] the overall structure and direction of the business" and "overseeing the senior management team in formulating strategy." Id. at 22; FTC 22G at 3.
  • by ZackSchil (560462) on Friday November 13, @10:17PM (#30094684)

    I just went there and clicked a purchase button that said I needed to log in, but my SSN would do just fine to log in.

    This is a pretty great scam.

  • by fermion (181285) on Friday November 13, @10:24PM (#30094724) Homepage Journal
    So I see that Gates and Buffet said recently that the economy is picking back up and all is well and there is no reason for anyone to be worried and the free market is perfect.

    But how can it be perfect if the we cannot protect those who need protection most from those who would steal their money. If $1 gets spent by ACORN in a questionable manner, an act of congress is immediately enacted,but when those not so well off are robbed, we can't even make the criminal parties stop, much less put them in jail.

    Or look at Verizon. They are stealing from their customers in $1.99 increments. And don't tell me it is not stealing. If you went to store and got charged for everything you put in your shopping cart before you checked out and left the store, and the store refused to refund you money if you did not actually want the merchandise, I am sure the cops would be called.

    Of course Billg loves the free market. If a contractor installs unlicensed versions of MS Office on a clients computer, that contractor can earn a million dollars bounty forreporting the company, and then the BSA has every right to put the company out of business with exorbitant and irrational penalties. But if MS steals software, they can just blame it on a contractor and then apologize.

    People are decrying the direction of the US, but I think after the past several years of pretty constant theft of tax dollars and personal property by the elite, a change was and is necessary.

    • by east coast (590680) on Friday November 13, @11:12PM (#30094960)
      People are decrying the direction of the US, but I think after the past several years of pretty constant theft of tax dollars and personal property by the elite, a change was and is necessary.

      Are you trying to say that what has happened recently isn't theft by the elite? If you are you seriously need to wake up. Instead of Verizon taking from their customers with little scams and contract foolery we now have big brother telling us that it doesn't matter if we like it or not; he's going to take from you regardless of position.

      We've effectively gone from a system that we could opt out of (for the most part) into one where the government forces you to give it up till you bleed. Tell me how much better things are again?

      Your problem with the free market is that you don't seem to know the difference between a luxury and a necessity. If you don't like Verizon's business practices boycott them. No one was twisting your arm. Now you have no choice.
      • by copponex (13876) on Saturday November 14, @12:34AM (#30095282) Homepage

        We've effectively gone from a system that we could opt out of (for the most part) into one where the government forces you to give it up till you bleed. Tell me how much better things are again?

        I see your point, but the idea you're missing is that much of technology moves from a luxury to a necessity very quickly. Ten years ago you could compete in the job market with no computer skills, and that's no longer the case. Shorter patent lifespans would allow companies to profit from good research, but not set back an entire society to profit a single corporation. Imagine if GE came out with a solar panel that was dirt cheap to manufacture, but charged 400 times more than it cost to make. China, India, and Russia could reverse engineer the product, and then we'd be competing with international companies that pay far less for electricity.

        Furthermore, you have zero input on the actions of corporations who provide these necessary luxuries, like oil, electricity, information infrastructure, and so on. At some point, you have to assign a third party with more power to keep them in check, or we'll all be living in company towns, shopping at company stores, which isn't a hell of a lot better than soviet communism.

    • by SuperKendall (25149) on Friday November 13, @11:13PM (#30094962)

      But how can it be perfect if the we cannot protect those who need protection most from those who would steal their money.

      The free market is not perfect.

      But how on earth would you stop someone like this in an un-free market? Remember they are quite willing from the outset to break any law. If all the laws you pass men nothing to them, how have you helped except make it harder for honest people to run a business, who then quit leaving more room open for scams?

    • by mc6809e (214243) on Friday November 13, @11:21PM (#30095006)

      So I see that Gates and Buffet said recently that the economy is picking back up and all is well and there is no reason for anyone to be worried and the free market is perfect.

      But how can it be perfect if the we cannot protect those who need protection most from those who would steal their money.

      The elderly are doing the same thing to workers right now through Social Security and Medicare.

      We're promised future product (retirement money and health care) if we make payments up front. And it's unlikely the state will be able to deliver since they've already spent the money.

      Sound familiar?

    • by Anonymous Coward on Friday November 13, @11:21PM (#30095008)

      I don't have any idea why you think the free market is going to protect the weak and stupid. The entire concept of the free market is to fleece the weak and stupid. Welcome to reality.

    • by Hasai (131313) on Friday November 13, @11:37PM (#30095056)

      ...the Sucker.

      Somewhere, P. T. Barnum is laughing at you.

    • by CodeBuster (516420) on Saturday November 14, @02:45AM (#30095716)

      But how can it be perfect if the we cannot protect those who need protection most from those who would steal their money.

      As PT Barnum once said, "the fool and his money are soon parted". This notion that the government has to step in and protect people from themselves is completely misguided; it treats everyone like grown up children who cannot take responsibility for their own choices. Do you want to live in the real world and be treated like an adult? If your answer is yes, you have to be willing to let people make their own decisions, no matter how stupid, and own their failures. That is what it means to be an independent adult.

      If $1 gets spent by ACORN in a questionable manner, an act of congress is immediately enacted,but when those not so well off are robbed, we can't even make the criminal parties stop, much less put them in jail.

      Personally, I was glad to see ACORN go. They were a criminal gang of election fraudsters and two-bit street hustlers who were out of their league and got what was coming to them. Did they honestly believe that they wouldn't be infiltrated and exposed? Their operational security was a joke and they paid the price. Good riddance.

  • Immoral people (Score:5, Insightful)

    by blindbat (189141) on Friday November 13, @10:35PM (#30094782) Homepage

    You can never make enough laws to keep people like this from exploiting others.

    It would never occur to those of us who have been raised with an inkling of an idea of good and evil to treat others in such a despicable manner.

    It has nothing to do with free market. It is an issue of ethics and values.

    Without the adoption of some standard of right and good within the individual heart, there is no hope of restraining people from similar scams.

    • Re:Immoral people (Score:5, Interesting)

      by Machtyn (759119) on Friday November 13, @11:44PM (#30095078) Homepage

      "Policemen and laws can never replace customs, traditions and moral values as a means for regulating human behavior. At best, the police and criminal justice system are the last desperate line of defense for a civilized society. Our increased reliance on laws to regulate behavior is a measure of how uncivilized we’ve become." -Walter Williams, “Laws Are a Poor Substitute for Common Decency, Moral Values,” Deseret News, Apr. 29, 2009, A15

      Your statement reminded me of this quote.

      • Also (Score:4, Insightful)

        by Sycraft-fu (314770) on Saturday November 14, @01:40AM (#30095504)

        It isn't worthless. Enforcing the law, imperfect though it may be, does help and serves two major functions against people with no morals:

        1) It deters some of them. While the sociopathic types that just don't care for others can never be made to care, they are generally extremely self interested. Well, something that often works then is threats. "If you do this, we will punish you." They don't want to be punished so they don't do it.

        2) It gets rid of some of them. Lock a criminal up, they can't go and commit their crimes. For those that won't be deterred, you simply remove their ability to cause problems.

        So while not perfect, it is worthwhile. It is also really the only thing you can do. There is no way to have a perfect moral code that prevents crime. Reason is even if you had such a code, and if everyone were taught it all their life, you'd get the scoiopaths who just don't care. They really don't have morals like most people. They can't empathize with others so all they care about is themselves. Morals won't work for them.

        Anything involving humans as they are now will not be perfect. That doesn't mean we shouldn't do the best we can.

  • so frustrating (Score:5, Insightful)

    by Anonymous Coward on Friday November 13, @10:40PM (#30094800)

    I'm not doing great financially, but those of us in the know are pretty good about staying on the connected side of the digital divide.

    Not only that, but we are the same folks that keep old parts around and every now and then are able to build a workable setup for someone that could really use a computer. People that are thrilled to have something, even if it comes with a CRT monitor and has a 7 year old video card.

    I've 'volunteered' hours working on crappy emachines for people because I know they can't go out and buy something fast and great.

    F you BlueHippo. I know these people personally, and a computer means a lot to them.

  • Go Try to log in... (Score:5, Informative)

    by jesseck (942036) on Friday November 13, @10:43PM (#30094818)
    I went to their website (Google for bluehippo), and when I clicked "Purchase" I was taken to a login screen.. where my username is my SSN, and password is my mother's maiden name. Yeah, I'll give them some more personal info after I enter that...
    • by CaroKann (795685) on Friday November 13, @11:24PM (#30095012)
      If you have trouble logging in with that, their helpful "Trouble Logging In" screen gives you plenty of other ways to log in. You just have to select and enter one of the following combinations:

      Social Security Number/Home Phone
      BlueHippo Account Number/Home Phone
      Social Security Number/House Number
      Bank Account Number/Zip Code (!)
      Social Security Number/Password (Mothers Maiden Name?)
  • Compare BlueHippo's logo to Demby Wishingwell from Playskool's Weebles videos and toys. Is it coincidental? [pineight.com]
  • by SKiRgE (411560) on Friday November 13, @11:49PM (#30095102)

    Yeah, but who here cringed every single time he said the word labtop instead of laptop?

  • by whois (27479) on Saturday November 14, @01:03AM (#30095398) Homepage

    I just called it and got through to someone calling themselves Danny Archer. They did not provide a company name in their greetings instead asking immediately for my first name.

    If they're shut down they need to be shut down.

The Constitution may not be perfect, but it's a lot better than what we've got!