At the request of the FTC and the State of Florida, last week, the Southern District Court of Florida temporarily shut down two major telemarketing operations. According to the restraining orders (see here and here) the companies deceived 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 places the businesses under the control of a court-appointed receiver.
The two complaints filed by the FTC alleged that since 2012, the defendants have used “scarewares” - software designed to trick consumers into thinking there are problems with their computers, then subjecting those consumers to high-pressure deceptive sales pitches for tech support products and services to fix their non-existent computer problems:
- In the first case, the defendants selling software include PC Cleaner Inc.; Netcom3 Global Inc.; Netcom3 Inc.; and Cashier Myricks, Jr. The telemarketing defendants include Inbound Call Experts LLC; Advanced Tech Supportco. LLC; PC Vitalware LLC; Super PC Support LLC; Robert D. Deignan, Paul M. Herdsman, and Justin M. Wright.
- In the second case, the defendants selling software include Boost Software Inc. and Amit Mehta. The telemarketing defendants include Vast Tech Support LLC (also doing business as OMG Tech Help, OMG Total Protection, OMG Back Up, downloadsoftware.com, and softwaresupport.com); OMG Tech Help LLC; Success Capital LLC; Jon Paul Holdings LLC; Elliot Loewenstern; Jon-Paul Vasta; and Mark Donahue.
According to the allegation set out in the complaints, each scam starts with computer “scareware” advertisement or 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 need to purchase the paid version of the software. In reality, as alleged, 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, the software directs them to call a toll-free number to “activate” the software. When the consumers call the activation number, 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 unnecessary computer support services. In addition, according to the allegations, the telemarketers inform the 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 and false sales pitch, and after convincing consumers that their computers need immediate help, the telemarketers pitch security software and tech support services that costs as much as $500.
These cases mark the third in a series of actions by the FTC against the operators of computer repair scams, including enforcement cases in 2011 and an action brought by the FTC earlier this year. We recommend our clients to take the necessary measures and implement the required policies and to make sure their advertisers and other partners comply with all applicable rules concerning the advertisement of computer tech support and repair programs.