Telemarketers from India who called Canadians and offered them virus protection for their computers have been fined by the country's telecommunications regulator as part of an international effort to put an end to a scam that saw many people hand over control of their computers.
Pecon Software Ltd. and Avaneesh Software were hit with a combined $507,000 in monetary penalties by the Canadian Radio-television and Telecommunications Commission, which worked with the U.S. Federal Trade Commission and the Australian Communications and Media Authority to target the companies.
But while the FTC filed complaints over alleged fraud designed to trick consumers into giving them access to their hard drives or selling unnecessary software, the CRTC and its Australian counterpart are seeking fines only for violations against Do-Not-Call regimes.
Andrea Rosen, the CRTC's chief compliance and enforcement officer, said foreign-based telemarketers "have been put on notice that they must comply with our rules when calling Canadians." She added in an interview: "We're here to protect the privacy of Canadians, and their wishes to not be called and annoyed."
The CRTC successfully stopped two Mexican companies in 2011 from calling Canadians on the Do-Not-Call registry, but this is the first time the commission will actually try to extract a monetary penalty for a violation from an overseas operation. If it is unable to locate any of the company's assets in Canada, the CRTC will work with the Do Not Call authorities in India and the United Kingdom, where Pecon has offices, and could take the matter to the courts in those countries.
The scam outlined by the FTC hit targets in the U.S., Canada, Australia, Ireland, New Zealand, and the United Kingdom from so-called "telemarketing boiler rooms" – high-pressure salesrooms – based mainly in India.
According to complaints filed Wednesday in the U.S. District Court for the Southern District of New York against 14 corporate defendants and 17 individuals, callers allegedly said they were affiliated with a legitimate software company – including Dell, Microsoft, McAfee, or Norton – and would "scare consumers into believing that their computers [were] in imminent danger of crashing."
They would direct consumers to a little-seen subdirectory on their computer and point out a common file they said was malicious.
They then convinced the consumer to pay between $49 and $450 for freely available software they did not actually need.
Some of the companies have been targeting consumers since at least 2008.
The alleged coverup was perhaps more elaborate than the scam itself. The FTC said scammers "hoped to avoid detection by consumers and law enforcers by using virtual offices that were actually just mail-forwarding facilities, and by using 80 different domain names and 130 different phone numbers."
The FTC said in its statement that a judge has ordered a halt to the scams and frozen the assets of the companies involved.