Network Security

FTC cracks down on new phone “scareware” ring

The Federal Trade Commission has cracked down on a ring of telemarketing companies, primarily based in India, which allegedly scammed tens of thousands of consumers who paid to have nonexistent malware cleaned off their computers.

A federal judge in New York has ruled that the assets of the defendants are to be temporarily frozen to halt further ruses from taking place, the FTC announced Wednesday.

The agency's investigations have linked fraudulent activity to six tech support scams, leading it to file complaints against Pecon Software, Zeal IT Solutions, PCCare247 and Lakshmi Infosoul Services in India, and two U.S.-based companies, Finmaestros and Virtual PC Solutions, which were all named in the FTC complaint.

The alleged tech support scams date back to at least 2008. In total, the filing addresses 14 corporate and 17 individual defendants.

According to the FTC, the telemarketers targeted English-speaking consumers in several countries, including the United States, Canada, Australia, Ireland, New Zealand and the U.K., and purported to be affiliated with well-known companies like Microsoft, Dell, McAfee and Norton. Fraudsters allegedly tricked consumers into buying anti-virus tools to rid their computer of malware, charging them anywhere from $49 to $450 for services.

After agreeing to pay, the victims were directed to visit a website and enter a code or download software, which allowed the alleged con artists to remotely access the consumers'' computers. At this point, the telemarketers went through various steps to show the victim that they were getting their money's worth – when in fact, the miscreants were remotely installing free programs, as they never actually detected or removed any malware.

The defendants are charged with committing unfair and deceptive commercial practices under the FTC Act, violating the Telemarketing Sales Rule and illegally calling numbers on the National Do Not Call Registry.

“The FTC has been aggressive – and successful – in its pursuit of tech support scams,” said Jon Leibowitz, chairman of the FTC in the release. “And the tech support scam artists we are talking about today have taken scareware to a whole other level of virtual mayhem.” 

Recently the FTC won a $163 million judgment against the last defendant in a separate “scareware” scheme. In that case, the agency also charged alleged swindlers with tricking consumers into paying for services to remove non-existent malware. 

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