The FTC has filed a complaint and secured a temporary injunction against five companies and their owners, alleging use of deceptive practices to trick consumers into purchasing unneeded technology services for their computers.
As detailed in the complaint, the FTC alleges that the scheme worked as follows: a pop-up ad would appear on a consumer’s computer screen, stating that the computer had been hacked or infected, and the ad would give a toll-free number to call for technical support services.
The ads were designed to appear as if they were from Microsoft, Apple, or the consumer’s internet service provider, and often consumers were unable to close or navigate away from the ads. When a consumer called the phone number, he or she would be automatically connected to one of the companies’ telemarketers in India who would try to convince the person that their computer needed to be repaired and that they should pay for repair services at a cost of approximately $200 to $400. Defendants told consumers, falsely, that they were certified by Microsoft and Apple, and they often remotely accessed consumers’ computers to demonstrate the supposed problems. The FTC claims that these “series of purported diagnostic tests, … in reality, are nothing more than a high-pressured sales pitch designed to scare consumers … .”
The complaint details how, as a part of its investigation of the companies, the FTC conducted an “undercover transaction” with the company. During that transaction the telemarketers claimed to show evidence of computer problems which, in reality, were standard, properly functioning features of the computer that was virus-free.
The FTC alleges that the five companies – Global Access Technical Support LLC, Global sMind LLC, Source Pundit LLC, Helios Digital Media LLC, and VGlobal ITES Private Limited – operated together in running a telemarketing scheme. The complaint also names three individual owners as defendants.
On October 12, the U.S. District Court for the Eastern District of Missouri issued an order temporarily prohibiting the companies from, among other things, representing that they are part of a U.S. technology firm such as Microsoft or Apple or from claiming they have detected security or performance issues on consumers’ computers.
Troutman Sanders will continue to monitor the progress of this case.