This week the FTC shut down a $120M tech support scam that consumer software buyers should be aware of. Two telemarketing firms were at the center of this FTC investigation, but there are many more that have yet to be shut down.
This type of scam has evolved into an extremely lucrative business practice that many consumer software companies are now pushing on their paying customers.
Typically when software is purchased online, customers receive a link to download the software with a license key to activate the service.
In an attempt to get as many customers calling in to these support call centers, many software companies are not delivering the link to download or the license key to activate their newly purchased software.
Instead, customers are instructed to call these tech support centers for "Activation Assistance" or "Installation Assistance". This is a dirty trick to get as many people calling into these support call centers as possible. In most cases, a free PC diagnosis is offered and the telemarketer will remotely access the customer's computer and use social engineering to sell needless tech support services.
I had the pleasure of speaking with the owner of one of these remote tech support firms and what I learned was astonishing. As a digital marketing professional for a software company, the conversation started off with an offer to pay $5 for every phone call I could refer to a call center in India. This is an alarming high amount to pay for each phone call, so I assumed a high number of those calls would turn into paying customers, but I had no idea how many. Through this discussion I learned that 30% of US customers who call into telemarketing centers are purchasing these types of tech support services. WOW!
Software companies stand to gain in some cases 40-50% on each sale they refer to these call centers, in some cases that's an additional $150-200 from customers who purchased a $30 piece of software. In some verticals such as registry repair, PC cleaners and driver updating software, it is actually hard to find a software company that is not referring customers to these types of call centers because the sheer amount of revenue that is produced.
Avoiding this scam is easy. Before you purchase software online, try to make sure that you will instantly get your license key. In case you are instructed to call a support number to "activate or install" the software you just purchased, you should request a refund right away. These types of software companies are putting their customers at risk and are not the type of company you should trust. (Hat tip to Kara Kritzer)