The FTC filed its complaint yesterday in federal court, but also announced the settlement with Restoro Cyprus Limited and Reimage Cyprus Limited. The FTC will used the $26 million to provide restitution to those who were impacted by the scam. Under the terms of the enforcement action, the two companies are also barred from misrepresenting security or performance issues or any other material related to the sale, marketing, or distribution of any product or service, and from engaging in deceptive telemarketing.

Consumers would get fake pop-ups on their computers, alerting them that their computers had been infected with a virus or malware. They were then urged to scan their computers, and the scans would reveal purported serious issues that needed immediate attention.

Consumers were then urged to buy software to fix the alleged problems, and then were told to call a number to activate the software. Telemarketers then attempted to sell additional services by accessing the consumers’ computers and misrepresenting that routine errors were more signs of malware. What was needed, the telemarketers said, were live technicians which would cost hundreds of dollars more to bring in and fix the “problem.”

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A supplemental rule on banning the use of impersonating individuals is a result of the comments that were filed on the proposed rule banning the impersonation of businesses and government agencies, the FTC announced. Scammers are using technology to defraud consumers by impersonating the voices and personalities of individuals they know — such as family members and friends.

The FTC is also considering holding the companies or platforms that allow for the creation of impersonated images, voices, or videos liable if they know or have reason to know that the tool is being used to harm consumers.

Under the new rule prohibiting the impersonation of businesses and government agencies, the FTC will be able to seek monetary relief in federal court from scammers that:

• Use government seals or business logos when communicating with consumers by mail or online.
• Spoof government and business emails and web addresses, including spoofing “.gov” email addresses or using lookalike email addresses or websites that rely on misspellings of a company’s name.
• Falsely imply government or business affiliation by using terms that are known to be affiliated with a government agency or business (e.g., stating “I’m calling from the Clerk’s Office” to falsely imply affiliation with a court of law).

The rule will go into effect 30 days after it is published in the Federal Register.

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Avast Limited was accused of collecting consumers’ browsing information for the past nine years through browser extensions and antivirus software that was installed on consumers’ computers. The company captured web searches and the pages that consumers visited, which revealed information such as their religious beliefs, health concerns, political leanings, financial status, and more, according to the FTC. All the while the company was telling consumers its products would protect consumers. Avast’s browser extension, for example, told consumers that it would

Avast Limited was accused of collecting consumers’ browsing information for the past nine years through browser extensions and antivirus software that was installed on consumers’ computers. The company captured web searches and the pages that consumers visited, which revealed information such as their religious beliefs, health concerns, political leanings, financial status, and more, according to the FTC. All the while the company was telling consumers its products would protect consumers. Avast’s browser extension, for example, told consumers that it would “block annoying tracking cookies that collect data on your browsing activities” and promised that its desktop software would “shield your privacy. Stop anyone and everyone from getting to your computer.” 

The company failed to anonymize the data it was selling to buyers, who could use the information to track specific users.

Along with paying the $16.5 million fine, the company has also agreed to the following requirements as part of the settlement with the FTC:

• Avast will be prohibited from selling or licensing any browsing data from Avast-branded products to third parties for advertising purposes;
• The company must obtain affirmative express consent from consumers before selling or licensing browsing data from non-Avast products to third parties for advertising purposes;
• Avast must delete the web browsing information transferred to Jumpshot and any products or algorithms Jumpshot derived from that data;
• Avast will be required to inform consumers whose browsing information was sold to third parties without their consent about the FTC’s actions against the company; and
• Avast will be required to implement a comprehensive privacy program that addresses the misconduct highlighted by the FTC.

A copy of the proposed settlement can be accessed by clicking here.

Why This Matters: A handful of organizations — Advertising Bureau, Fake Review Watch, and a group of academic researchers — have asked the FTC for the opportunity to present their positions, which led the FTC to schedule the informal hearing.

• The request from the organizations was made after the FTC published a proposed rule last July that would stop marketers from using illicit practices such as fake reviews, suppressing honest reviews, and paying for positive reviews. Each of these practices deceive consumers from receiving real feedback about products and services, the FTC said.

What’s Going to Happen: The hearing is open to the public and will be available via webcast. During the hearing, each of the three organizations will have a chance to provide an oral statement to address issues raised during the rulemaking process.

More on the Hearing: The FTC received more than 100 comments about the proposed rule. In its comment the IAB said it wanted an oral hearing because it will allow the IAB to field questions and further explain its reasoning. Such a setting “will allow for a productive exchange, and a more fruitful discussion about how the proposed rule can be revised to address any potential deceptive and unfair practices affecting the marketplace without overburdening legitimate business practices.”

• The IAB said it plans to present numerous examples to the FTC about why some of the proposed rule’s provisions are impractical and why they should not be included in the final rule.

The Last Word: “Our proposed rule on fake reviews shows that we’re using all available means to attack deceptive advertising in the digital age,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, when the proposed rule was announced. “The rule would trigger civil penalties for violators and should help level the playing field for honest companies.”

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Who’s Involved: The companies were owned by Taylor Welch and Christopher Evans. Payton Welch and Ashton Shanks worked there as employees. The companies involved are: WE Capital, LLC; Traffic and Funnels, LLC; and Evans and Welch Holdings, LLC.

What They Have to Do: As a result of the consent order, the companies are:

• Prohibited from making deceptive earnings claims
• Prohibited from deceiving consumers
• Required to turn over money. Taylor Welch will turn over $600,000 and Evans $400,000.

The actual monetary judgment against the defendants is for $16,363,073.11, but most of that has been suspended because the defendants don’t have the money to repay it. Consumers allegedly paid more than $29 million to the defendants between 2018 and 2022.

What They Did: The defendants are accused of running a scheme called “The Sales Mentor” where they deceived consumers into paying hundreds or thousands of dollars for telemarketing training programs that were rarely, if ever, delivered. Videos promoting the scheme told consumers that the field of telemarketing sales could earn incomes of up to $20,000 per month. They also claimed to have access to a waiting list of companies looking to hire consumers who completed the program.

The Last Word: “Traffic and Funnels lured people looking to work and earn an income with false or unfounded earnings claims, even after receiving legal notices from the FTC about the illegality of such conduct,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue to crack down on deceptive earnings claims that cheat consumers.”  

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