On Monday, the Federal Trade Commission (“FTC”) announced its settlement with Vast Tech Support, LLC, OMG Tech Help, LLC and their chief operating officer Mark Donohue (collectively, the “Defendants”) concerning claims that the Defendants used software designed to trick consumers into believing that their computers were infected with viruses. The parties recently agreed on the terms of a false advertising settlement and are now seeking court approval.
How did Defendants Falsely Advertise their Product?
False Advertising Claims against Defendants
According to the complaint filed by the FTC, the Defendants used software designed to mislead consumers into believing that their respective computers had been infected with a virus. The software directed users to contact telemarketers who, according to the FTC, “subjected those consumers to high-pressure deceptive sales pitches for tech support products and services.” The FTC, along with the State of Florida, charged the Defendants with violating the Telemarketing Sales Rule, the FTC Act, and the Florida Deceptive and Unfair Trade Practices Act.
Pursuant to the terms of the false advertising settlement with the FTC, the corporate defendants are required to surrender all of their assets to a court receiver. Additionally, the corporate defendants are subject to a $27.2 million judgment, which will be partially suspended. The principal is also subject to a separate $9,177,000 judgment, which has also been suspended.
Last month, we blogged that the FTC has been cracking down on false advertising campaigns across the country. The penalties sought in such actions, whether initiated by the FTC or state regulators, can be quite severe. As a result of this risk to marketers, it is important to engage competent counsel prior to commencing any marketing campaign, particularly those involving health benefit-related claims.