After over a year of litigation against fourteen businesses and seventeen individuals, the Federal Trade Commission (“FTC”) recently entered into a settlement with one of the individual defendants in an alleged tech support scheme that targeted consumers with fake malware scams.

According to the FTC, the alleged scheme involved telemarketers contacting consumers by phone, pretending that they were affiliated with companies such as Dell, Microsoft and McAfee, and claiming that the consumers’ computers likely were infected with malware.  The telemarketers then preyed on consumers’ ignorance of the inner workings of their computers and directed them to a utility area of their computers to (falsely) demonstrate the malware infection.

Consumers were then told that the malware could be removed for a fee, which typically ranged from $49 to $450. When consumers agreed to pay the fee, they were directed to a website to enter a code or download a software program that allowed the defendants to remotely access the consumers’ computers and “remove” the non-existent malware and download otherwise free programs.

The FTC charged the defendants with violating the FTC Act, which prohibits unfair and deceptive commercial practices, as well as the Telemarketing Sales Rule.  The FTC also brought charges against the defendants for calling numbers on the Do Not Call Registry.

The Settlement

The Stipulated Final Judgment and Order was recently entered by a federal court in New York against individual defendant, Navin Pasari.  While the monetary judgment is quite low ($14,369.00) and represents the amount of money that Pasari allegedly received from the other defendants, the injunctive and cooperation clauses will govern Pasari’s business life for years.

Without a time limitation, Pasari agreed to be prohibited from opening or assisting with the opening of payment processing accounts for any company unless he maintains supervision over those accounts. As part of the settlement, Pasari is barred – in connection with the advertising, marketing, promotion, offering for sale, or sale of any good or service – from misrepresenting any material fact including, but not limited to, affiliation with any other business.

Pasari also agreed to cooperate fully with the FTC going forward, to keep the FTC apprised of his business activities and to submit compliance notices for five years.