At the request of the Federal Trade Commission and the State of Florida, a federal court has temporarily shut down two massive telemarketing operations that conned tens of thousands of consumers out of more than $120 million by deceptively marketing computer software and tech support services. The orders also temporarily freeze the defendants’ assets and place the businesses under the control of a court-appointed receiver.
According to complaints filed by the FTC, since at least 2012, the defendants have used software designed to trick consumers into thinking there are problems with their computers, then subjected those consumers to high-pressure deceptive sales pitches for tech support products and services to fix their non-existent computer problems.
“These operations prey on consumers’ lack of technical knowledge with deceptive pitches and high-pressure tactics to sell useless software and services to the tune of millions of dollars,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “There’s no excuse for it, and we are pleased the court has taken steps to temporarily shut down these scams while our lawsuit proceeds.”
These cases mark the third in a series of actions by the FTC against the operators of computer repair scams, including an enforcement sweep of cases in 2011 and an action brought by the FTC earlier this year against a New York-based scammer.
In this latest action, the FTC and the State of Florida have filed two separate cases against companies who allegedly sold the bogus software and the deceptive telemarketing operators who allegedly sold needless tech support services:
According to the FTC’s complaints, each scam starts with computer software that purports to enhance the security or performance of consumers’ computers. Typically, consumers download a free trial version of software that runs a computer system scan. The defendants’ software scan always identifies numerous errors on consumers’ computers, regardless of whether the computer has any performance problems.
The software then tells consumers that, in order to fix the identified errors, they will have to purchase the paid version of the software. In reality, the FTC alleges, the defendants pitching the software designed these highly deceptive scans to identify hundreds or even thousands of “errors” that have nothing to do with a computer’s performance or security. After consumers purchase the “full” version of the software at a cost of $29 to $49, the software directs them to call a toll-free number to “activate” the software.
When consumers call the activation number, however, they are connected to telemarketers who try to sell computer repair services and computer software using deceptive scare tactics to deceive consumers into paying for unneeded computer support services.
According to the FTC, the telemarketers tell consumers that, in order to activate the software they have just purchased, they must provide the telemarketers with remote access to their computers. The telemarketers then launch into a scripted sales pitch that includes showing consumers various screens on their computers, such as the Windows Event Viewer, and falsely claiming that these screens show signs that consumers’ computers have significant damage. After convincing consumers that their computers need immediate help, the telemarketers then pitch security software and tech support services that cost as much as $500.
The two complaints allege that the defendants violated Section 5 of the FTC Act, the Telemarketing Sales Rule and the Florida Deceptive and Unfair Trade Practices Act.
The Commission thanks the Palm Beach County Sheriff’s Department and the Delray Beach Police Department for their assistance in this matter.
The Commission vote authorizing the staff to file each of the complaints was 5-0. The actions were both filed in the U.S. District Court for the Southern District of Florida. The court signed the temporary restraining orders on Nov. 12. 2014.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The cases will be decided by the court.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.
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