Two recent cases continue the ongoing Federal Trade Commission's ("FTC") enforcement focus on scammers who frighten consumers into purchasing expensive and unnecessary computer repairs and technical support services (see our previous report on this regulatory trend).
The notable penalties and enforcement measures in these cases demonstrate the considerable risk of launching related marketing campaigns without an adequate review of the campaigns' and software's compliance with applicable regulatory standards.
In one of the cases, the FTC along with the State of Florida, settled last month, charges against Vast Tech Support, OMG Tech Help, and their Chief Operating Officer, concerning claims of deceptive marketing of computer software and technical support services.
According to the complaint filed by the FTC in 2014, the defendants used software designed to mislead consumers into believing that there were technical problems with their computers. The software directed users to contact telemarketers who subjected those consumers to high pressure deceptive sales pitches for technical support products and services.
The settlement prohibits the defendants from misleading consumers as to the nature of the products they sell or market, as well as deceptive telemarketing. The corporate defendants are also prohibited from advertising, promoting or selling any technical support products or services. Additionally, the corporate defendants are subject to a $27.2 million judgment, which will be partially suspended. The Chief Operation Officer is also subject to a separate $9.1 million judgment, which has also been suspended based on his financial condition. In addition, the companies are required to surrender all of their assets to a court receiver.
In another case, the FTC and the State of Florida have taken action against defendants who operated an international technical support operation and allegedly misrepresented to consumers that malware or hackers had compromised their computers and that the operation was associated with or confirmed by Microsoft and Apple in order for their computers to be repaired.
The complaint, argues that defendants relied on a combination of deceptive online ads and misleading, high pressure sales tactics to scare consumers into wasting hundreds of dollars for shady computer “repairs” and antivirus software.
A federal court has temporarily shut down the defendants’ operation, frozen their assets, and placed the control of the businesses with a court appointed receiver.