United States: FTC Obtains Multi-Million Dollar Judgments Against Alleged Fake Malware Tech Support Companies And Their Owners

The United States District Court for the Southern District of New York recently issued default judgments in six separate actions in favor of the Federal Trade Commission ("FTC") against fourteen corporate defendants and fourteen individual defendants that allegedly operated tech support scams out of India.

The judgments follow extensive litigation and earlier settlements with other named defendants.

The Allegations Against Fake Malware Tech Support Companies and their Owners

As we previously reported, according to the FTC, the alleged scheme involved telemarketers contacting consumers by phone, pretending that they were affiliated with companies such as Dell, Microsoft and McAfee, and claiming that the consumers' computers likely were infected with malware.  The telemarketers then preyed on consumers' ignorance of the inner workings of their computers and directed them to a utility area located on their computers to (falsely) demonstrate the malware infection.

Consumers were then told that the malware could be removed for a fee, which typically ranged from $49 to $450.  When consumers agreed to pay the fee, they were directed to a website to enter a code or download a software program that allowed the defendants to remotely access the consumers' computers and "remove" the non-existent malware and download otherwise free programs.

The Multi-Million Dollar Judgments

The six default judgments ban the defendants from marketing any computer security-related technical support device and from disclosing, selling or failing to destroy information that they obtained from their alleged victims.  While the combined judgments exceed $5.1 million, it may be difficult for the FTC to collect from these foreign defendants.

The FTC aggressively targets purported violations of the FTC Act, which serves to combat "deceptive acts or practices."   Therefore, it is important that marketers understand the intricacies of the FTC Act and other federal and state laws that restrict how products are advertised to consumers.  Failure to do so may result in significant injunctive and monetary penalties.

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