Two widespread telemarketing operations that conned tens of thousands of consumers out of more than $120 million have been temporarily shut down ahead of a full investigation.
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 them to high-pressure deceptive sales pitches for tech-support products and services to fix their non-existent computer problems.
Now, at the request of the Federal Trade Commission and the State of Florida, a federal court has temporarily shut down those operations, and has frozen the defendants’ assets and placed the businesses under the control of a court-appointed receiver.
“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, in a statement. “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.
There are two separate cases at issue here. However, 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 then 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, there are no such issues on the computer in question.
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. And when 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 unneeded computer 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.