Tech Scam Costs Office Depot, Software Company $35M

Advertising Law

For tricking consumers into spending millions of dollars on computer repairs and technical services by falsely claiming their software uncovered malware symptoms on consumers’ computers, Office Depot Inc. and its software supplier, Support.com, have agreed to pay a total of $35 million to the Federal Trade Commission.

Office Depot marketed Support.com’s PC Health Check software in stores, on the radio and in print as a “free PC tune-up” or “free PC checkup” that scanned a consumer’s computer for viruses and helped improve its performance. But the companies configured the software to report that the scan detected malware symptoms or infections when consumers answered “yes” to one of four questions at the start of the scan, the FTC alleged, even if the scan found no evidence of malware or viruses.

For example, if a consumer answered in the affirmative when asked if the computer ran slow or crashed often, the software would display a “view recommendation” button that provided a detailed list of the services that consumers were advised to purchase in order to fix their alleged problems.

The companies were aware of complaints and concerns about the PC Health Check program dating back to 2012, the FTC said. Even though one employee complained, “I cannot justify lying to a customer or being TRICKED into lying to them for our store to make a few extra dollars,” Office Depot continued to use the program until late 2016, even paying extra commissions to store managers and employees who met their weekly goals for PC Health Check runs and tech service sales, according to the Florida federal court complaint.

To settle the charges of deceptive practices in violation of Section 5 of the FTC Act, Office Depot agreed to pay $25 million and Support.com promised to chip in another $10 million, which will be used to refund affected consumers. Both companies are prohibited from future misrepresentations about the performance or detection of security issues on consumer electronic devices.

“Consumers have a hard enough time protecting their computers from malware, viruses and other threats,” FTC Chair Joseph Simons said in a statement. “This case should send a strong message to companies that they will face stiff consequences if they use deception to trick consumers into buying costly services they may not need.”

To read the complaint and proposed consent order in FTC v. Office Depot Inc., click here.

Why it matters: The FTC characterized the companies’ deceptive practices as a 21st-century take on an old-fashioned scam: duping consumers into paying for “repairs” on products that don’t actually need fixing. The lessons from the multimillion-dollar case? Substantiate service representations as carefully as product claims, the agency suggested, and refrain from using fear (in this instance, security concerns) to motivate sales.

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