The Federal Trade Commission has reined in two telecommunications firms accused of generating approximately $120 million in revenue from fabricating problems on consumers' computers and coercing users into subscribing to tech support services.
The FTC and the state of Florida compelled a federal court to shut down the telecommunications firms accused of the deceptive practices. The court has frozen the defendants' assets and placed them under the receivership of a court-appointed entity.
The suit names multiple software companies, including PC Cleaner, Netcom3, Boost Software and Cashier Myricks Jr. and Amit Mehta, along with telemarketers Inbound Call Experts; Advanced Tech Supportco; PC Vitalware; Super PC Support; Vast Tech Support also doing business as OMG Tech Help, OMG Total Protection, OMG Back Up, downloadsoftware.com and softwaresupport.com; OMG Tech Help; Success Capital; and Jon Paul Holdings.
The scams, which date back as far as 2012, involve a tech support company rep convincing individuals and organizations into installing security software, according to the FTC's allegations. The software would report nonexistent problems, at which point the telecommunications firms would step in to offer products or services to correct the fabricated issues.
The rigged software informs users the problems could be corrected by activating a license, which were priced as low as $29, the FTC asserts. But when the users called in to activate the software, they were redirected to the telecommunications firms and subjected to aggressive sales pitches for other products.
The telemarketer's sales tactics included convincing consumers to provide remote PC access, says the FTC. The deceptive representatives would pull up screens on the consumers' computers and point to what they alleged where critical security flaws.
The representatives would stress the need to act immediately on services and software solutions that would cost up to $500, the FTC alleges. The FTC is grateful the federal court decided to put a freeze on the defendant's assets while the lawsuit moves forward, says Jessica Rich, director of the FTC's Bureau of Consumer Protection
"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," says Rich.
While the FTC is working to make the telecommunications firms answer the charges raised about the deceptive practices, the commission recently compelled an online dating firm into settling up accusations that its sites used fake profiles to bait lonely hearts into paying for premium services. JDI Dating agreed to pay $616,165 to settle charges raised against it by the FTC.
"JDI Dating used fake profiles to make people think they were hearing from real love interests and to trick them into upgrading to paid memberships," said Rich. "Adding insult to injury, users were charged automatically to renew their subscriptions -- often without their consent."