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Date: 03-30-2019
Case Style:
Federal Trade Commission v. Office Depot, Inc., at al.
Case Number: 9:19-cv-80431-RLR
Judge: Robin L. Rosenberg
Court: United States District Court for the Southern District of Florida (Miami-Dade County)
Plaintiff's Attorney: Alden F. Abbott, Thomas M. Biesty, Sung Wan Kim, Colleen B. Robbins, Claire Wack
Defendant's Attorney: William MacLeod and Katrina S. Lindsey
Description:
Washington, DC - Office Depot and Tech Support Firm Will Pay $35 Million to Settle FTC Allegations That They Tricked Consumers into Buying Costly Computer Repair Services
Office Depot, Inc. and a California-based tech support software provider have agreed to pay a total of $35 million to settle Federal Trade Commission allegations that the companies tricked customers into buying millions of dollars’ worth of computer repair and technical services by deceptively claiming their software had found malware symptoms on the customers’ computers.
Office Depot has agreed to pay $25 million while its software supplier, Support.com, Inc., has agreed to pay $10 million as part of their settlements with the FTC. The FTC intends to use these funds to provide refunds to consumers.
“Consumers have a hard enough time protecting their computers from malware, viruses, and other threats,” said FTC Chairman Joe Simons. “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.”
In its complaint, the FTC alleges that Support.com worked with Office Depot for nearly a decade to sell technical support services at its stores. Office Depot and Support.com used PC Health Check, a software program, as a sales tool to convince consumers to purchase tech repair services from Office Depot and OfficeMax, Inc., which merged in 2013.
The Office Depot companies marketed the program as a free “PC check-up” or tune-up service to help improve a computer’s performance and scan for viruses and other security threats. Support.com, which received tens of millions of dollars in revenue from Office Depot, remotely performed the tech repair services once consumers made the purchase.
The FTC alleges that while Office Depot claimed the program detected malware symptoms on consumers’ computers, the actual results presented to consumers were based entirely on whether consumers answered “yes” to four questions they were asked at the beginning of the PC Health Check program. These included questions about whether the computer ran slow, received virus warnings, crashed often, or displayed pop-up ads or other problems that prevented the user from browsing the Internet.
The complaint alleges that Office Depot and Support.com configured the PC Health Check Program to report that the scan found malware symptoms or infections whenever consumers answered yes to at least one of these four questions, despite the fact that the scan had no connection to the “malware symptoms” results. After displaying the results of the scan, the program also displayed a “view recommendation” button with a detailed description of the tech services consumers were encouraged to purchase—services that could cost hundreds of dollars—to fix the problems.
The FTC alleges that both Office Depot and Support.com have been aware of concerns and complaints about the PC Health Check program since at least 2012. For example, one OfficeMax employee complained to corporate management in 2012, saying “I cannot justify lying to a customer or being TRICKED into lying to them for our store to make a few extra dollars.” Despite this and other internal warnings, Office Depot continued until late 2016 to advertise and use the PC Health Check program and pushed its store managers and employees to generate sales from the program, according to the complaint.
The Commission alleges that both companies violated the FTC Act’s prohibition against deceptive practices.
In addition to the monetary payment, the proposed settlement also prohibits Office Depot from making misrepresentations about the security or performance of a consumer’s electronic device and requires the company to ensure its existing and future software providers do not engage in such conduct. As part of its proposed settlement, Support.com cannot make, or provide others with the means to make, misrepresentations about the performance or detection of security issues on consumer electronic devices.
The Commission vote authorizing the staff to file the complaint and stipulated final orders was 5-0. The FTC filed the complaint and stipulated final orders in the U.S. District Court for the Southern District of Florida. NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by a District Court judge.
Plaintiff, the Federal Trade Commission (“Commission” or “FTC”), filed its Complaint for
Permanent Injunction and other Equitable Relief ( “Complaint”) in this matter, pursuant to Section
13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b). The Commission
and Defendant Office Depot, Inc. (“Office Depot”) stipulate to the entry of this Stipulated Order
for Permanent Injunction and Monetary Judgment (“Order”) to resolve all matters in dispute in
this action between them.
THEREFORE, IT IS ORDERED as follows:
FINDINGS
1. This Court has jurisdiction over this matter.
2. The Complaint charges that Office Depot participated in deceptive acts or practices in
violation of Section 5 of the FTC Act, 15 U.S.C. § 45, in connection with marketing and selling
computer security or computer-related technical support services.
3. Office Depot neither admits nor denies any of the allegations in the Complaint, except as
specifically stated in this Order. Only for purposes of this action, Office Depot admits the facts
necessary to establish jurisdiction.
4. Office Depot waives any claim that it may have under the Equal Access to Justice Act, 28
U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agrees
to bear its own costs and attorney fees.
5. Office Depot waives all rights to appeal or otherwise challenge or contest the validity of
this Order.
DEFINITIONS
For the purpose of this Order, the following definitions apply:
A. “Settling Defendant” means Office Depot, Inc., and its successors and assigns.
B. “Electronic Device” means any cell phone, handheld device, smartphone, tablet, laptop
computer, desktop computer, or any other device on which a software program, code, script,
or other content can be downloaded, installed, or run.
C. “Software Provider” means any Person that, in exchange for consideration, provides
diagnostic software services to Settling Defendant for purposes of facilitating a technical
support repair sale to retail customers.
D. “Person” means any natural person or entity, including but not limited to any individual,
firm, corporation, company, partnership, association, trade association, business trust, public
agency, department, bureau, board, or any other form of public, private or legal entity.
ORDER
I. PROHIBITION AGAINST MISREPRESENTATIONS
IT IS ORDERED that Settling Defendant, its officers, agents, and employees and all other
Persons in active concert or participation with any of them, who receive actual notice of this Order,
whether acting directly or indirectly, in connection with promoting, providing, distributing, selling,
or offering for sale a technical support good or service are permanently restrained and enjoined
from misrepresenting, expressly or by implication:
A. That they have detected security or performance issues on a consumer’s Electronic Device,
including viruses, infections, malware or symptoms of malware; or
B. Any other fact material to consumers concerning such goods or services, such as their value
or total costs, any material restrictions, limitations, or conditions, or any material aspect of the
performance, efficacy, nature or central characteristics of such goods or services.
II. SOFTWARE PROVIDER REVIEW, TERMINATION AND RECORDKEEPING
IT IS FURTHER ORDERED that:
A. Settling Defendant shall, within one hundred twenty (120) days of the date of entry of this
Order, review whether each of Settling Defendant’s existing Software Providers, in the course of
acting as a Software Provider, engages in any conduct described in Section I of this Order. If this
review reveals that the Software Provider is engaging in any such conduct with respect to such
services, Settling Defendant will immediately suspend services as necessary to stop such conduct,
until further review establishes that the Software Provider is no longer engaging in any such
conduct, or immediately terminate the Software Provider’s provision of technical support goods
and services.
B. If Settling Defendant becomes aware of any evidence or information suggesting that a
Software Provider, in the course of acting as a Software Provider, is engaging in any conduct
described in Section I of this Order, Settling Defendant shall perform an additional review of the
Software Provider within thirty (30) days. If this review reveals that the Software Provider is
engaging in any such conduct with respect to such services, Settling Defendant will immediately
suspend services as necessary to stop such conduct, until further review establishes that the
Software Provider is no longer engaging in any such conduct, or immediately terminate the
Software Provider’s provision of technical support goods and services.
C. Prior to entering into a business relationship with any prospective Software Provider,
Settling Defendant shall conduct a review of whether the prospective Software Provider, in the
course of providing technical support goods and services, has engaged, is engaging, or is likely to
engage in any conduct described in Section I of this Order. Settling Defendant will not establish
a business relationship with the prospective Software Provider if this review concludes that the
prospective Software Provider is engaging or is likely to engage in any conduct described in
Section I of this Order.
D. Reviewing a Software Provider, for the purposes of Paragraphs A - C, above, must include
steps reasonably calculated to determine whether a Software Provider, in the course of providing
technical support goods and services, engages in any conduct described in Section I of this Order.
Such steps may include obtaining and reviewing the Software Provider’s software, advertising and
marketing materials, and consumer reviews, but need not include all of these steps.
E. Settling Defendant shall create and maintain records of its reviews and any suspensions or
terminations of the use or sale of technical support goods and services provided by each Software
Provider, including documentation of the review process, procedures, and implementation, status,
and outcome.
III. MONETARY JUDGMENT
IT IS FURTHER ORDERED that:
A. Judgment in the amount of twenty-five million dollars ($25,000,000) is entered in favor of
the Commission against Settling Defendant as equitable monetary relief.
B. Settling Defendant is ordered to pay the amount in Subsection A to the Commission within
14 days of entry of this Order by electronic fund transfer in accordance with instructions previously
provided by a representative of the Commission.
IV. ADDITIONAL MONETARY PROVISIONS
IT IS FURTHER ORDERED that:
A. Settling Defendant relinquishes dominion and all legal and equitable right, title, and
interest in all assets transferred pursuant to this Order and may not seek the return of any assets.
B. The facts alleged in the Complaint will be taken as true, without further proof, in any
subsequent civil litigation by or on behalf of the Commission, in a proceeding to enforce its rights
to any payment or monetary judgment pursuant to this Order, such as a nondischargeability
complaint in any bankruptcy case.
C. The facts alleged in the Complaint establish all elements necessary to sustain an action by
the Commission pursuant to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C.
§ 523(a)(2)(A), and this Order will have collateral estoppel effect for such purposes.
D. Settling Defendant acknowledges that its Taxpayer Identification Numbers (Social
Security Numbers or Employer Identification Numbers) may be used for collecting and reporting
on any delinquent amount arising out of this Order, in accordance with 31 U.S.C. § 7701.
E. All money paid to the Commission pursuant to this Order may be deposited into a fund
administered by the Commission or its designee to be used for equitable relief, including consumer
redress and any attendant expenses for the administration of any redress fund. If a representative
of the Commission decides that direct redress to consumers is wholly or partially impracticable or
money remains after redress is completed, the Commission may apply any remaining money for
such other equitable relief (including consumer information remedies) as it determines to be
reasonably related to Settling Defendant’s practices alleged in the Complaint. Any money not
used for such equitable relief is to be deposited to the U.S. Treasury as disgorgement. Settling
Defendant has no right to challenge any actions the Commission or its representatives may take
pursuant to this Subsection.
V. CUSTOMER INFORMATION
IT IS FURTHER ORDERED that Settling Defendant, its officers, agents, employees, and
all other persons in active concert or participation with any of them, who receive actual notice of
this Order, are permanently restrained and enjoined from directly or indirectly from failing to
provide sufficient customer information to enable the Commission to efficiently administer
consumer redress. If a representative of the Commission requests in writing any information in
the possession of Settling Defendant related to redress, Settling Defendant must provide it, in the
form prescribed by the Commission, within 14 days.
VI. ORDER ACKNOWLEDGMENTS
IT IS FURTHER ORDERED that Settling Defendant obtain acknowledgments of receipt
of this Order:
A. Settling Defendant, within 7 days of entry of this Order, must submit to the Commission
an acknowledgment of receipt of this Order sworn under penalty of perjury.
B. For 3 years after entry of this Order, Settling Defendant must deliver a copy of this Order
to: (1) all principals, officers, and directors; (2) all upper-level management, including vicepresidents,
division heads, merchants, and store managers, who have managerial responsibilities
for the advertising, modification or operation of diagnostic software programs, for use with retail
customers, that purport to detect security or performance issues on consumers’ Electronic Devices;
and (3) any business entity resulting from any change in structure as set forth in the Section titled
Compliance Reporting. Delivery must occur within 7 days of entry of this Order for current
personnel. For all others, delivery must occur before they assume their responsibilities.
C. From each individual or entity to which Settling Defendant delivered a copy of this Order,
Settling Defendant must obtain, within 30 days, a signed and dated acknowledgment of receipt of
this Order.
VII. COMPLIANCE REPORTING
IT IS FURTHER ORDERED that Settling Defendant make timely submissions to the
Commission:
A. One year after entry of this Order, Settling Defendant must submit a compliance report,
sworn under penalty of perjury:
1. Settling Defendant must: (a) identify the primary physical, postal, and email
address and telephone number, as designated points of contact, which representatives of the
Commission may use to communicate with Settling Defendant; (b) identify all of Settling
Defendant’s businesses by all of their names, telephone numbers, and physical, postal, email, and
Internet addresses; (c) describe the activities of each business, including the goods and services
offered, and the means of advertising, marketing, and sales; (d) describe in detail whether and how
Settling Defendant is in compliance with each Section of this Order; and (e) provide a copy of
each Order Acknowledgment obtained pursuant to this Order, unless previously submitted to the
Commission.
B. For 10 years after entry of this Order, Settling Defendant must submit a compliance
notice, sworn under penalty of perjury, within 14 days of any change in: (a) any designated point
of contact; or (b) the structure of Settling Defendant or any entity that Settling Defendant has any
ownership interest in or controls directly or indirectly that may affect compliance obligations
arising under this Order, including: creation, merger, sale, or dissolution of the entity or any
subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order.
C. Settling Defendant must submit to the Commission notice of the filing of any bankruptcy
petition, insolvency proceeding, or similar proceeding by or against Settling Defendant within 14
days of its filing.
D. Any submission to the Commission required by this Order to be sworn under penalty of
perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by concluding: “I
declare under penalty of perjury under the laws of the United States of America that the foregoing
is true and correct. Executed on: _____” and supplying the date, signatory’s full name, title (if
applicable), and signature.
E. Unless otherwise directed by a Commission representative in writing, all submissions to
the Commission pursuant to this Order must be emailed to DEbrief@ftc.gov or sent by overnight
courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau of Consumer
Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.
The subject line must begin: FTC v. Office Depot, Inc., et al.
VIII. RECORDKEEPING
IT IS FURTHER ORDERED that Settling Defendant must create certain records for 10
years after entry of the Order, and retain each such record for 5 years. Specifically, Settling
Defendant, in connection with marketing and selling computer security software or computerrelated
technical support services to retail customers, must create and retain the following records:
A. accounting records showing the revenues from all goods or services sold;
B. personnel records showing, for each Person providing services, whether as an employee or
otherwise, that person’s: name; addresses; telephone numbers; job title or position; dates of
service; and (if applicable) the reason for termination;
C. records of all consumer complaints concerning the subject matter of the Order, whether
received directly or indirectly, such as through a third party, and any response;
D. all records necessary to demonstrate full compliance with each provision of this Order,
including all submissions to the Commission; and
E. a copy of each unique advertisement or other marketing material.
IX. COMPLIANCE MONITORING
IT IS FURTHER ORDERED that, for the purpose of monitoring the Settling Defendant’s
compliance with this Order:
A. Within 21 days of receipt of a written request from a representative of the Commission,
Settling Defendant must: submit additional compliance reports or other requested information,
which must be sworn under penalty of perjury; appear for depositions; and produce documents for
inspection and copying. The Commission is also authorized to obtain discovery, without further
leave of court, using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30
(including telephonic depositions), 31, 33, 34, 36, 45, and 69. Provided, however, that Settling
Defendant, after attempting to resolve a dispute without court action and for good cause shown,
may file a motion with this Court seeking an order for one or more of the protections set forth in
Rule 26(c).
B. For matters concerning this Order, the Commission is authorized to communicate directly
with the Settling Defendant. Settling Defendant must permit representatives of the Commission
to interview any employee or other Person affiliated with Settling Defendant who has agreed to
such an interview. The Person interviewed may have counsel present.
C. The Commission may use all other lawful means, including posing, through its
representatives as consumers, suppliers, or other individuals or entities, to Settling Defendant or
any individual or entity affiliated with Settling Defendant, without the necessity of identification
or prior notice. Nothing in this Order limits the Commission’s lawful use of compulsory process,
pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1.
X. RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes of
construction, modification, and enforcement of this Order.
DONE AND ORDERED in Chambers, West Palm Beach, Florida, this 28th day of March,
2019.
Outcome: Settled for $35 million.
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