Although not admitting any wrongdoing, Office Depot and California-based Support.com have agreed to pay $35 million to settle the claim that they deceived customers into believing their computers were infected with malicious malware and vulnerable to other security threats.
The FTC alleged that, from at least 2009 to late 2016, the companies would offer customers a free “PC Health Check Program” to determine whether their computers had any performance problems.
But the real purpose of the checkup was to aggressively sell diagnostic and repair services to customers that, in many cases, they didn't need, according to Claire Wack, an attorney in the FTC's division of marketing practices and the lead attorney on the case.
Office Depot and Support.com -- which remotely provided the technical support services -- allegedly drove sales by programming the PC checkup to report that a repair was necessary whenever a customer answered yes to any one of four questions asked, including whether the person's computer was experiencing frequent pop-up ads, according to the FTC complaint. Consumers were then encouraged to purchase repair services that could cost more than $300.
To their credit, it appears that some Office Depot employees complained about the ruse, the FTC lawsuit said.
"I cannot justify lying to a customer or being TRICKED into lying to them for our store to make a few extra dollars," one employee wrote to OfficeMax's corporate management.
In 2013, one Office Depot employee told the Florida attorney general's office that the company was using a software program that "will make consumers believe their computer has a virus," according to the FTC.
A year later, yet another employee told management that the PC checkup program "finds malware symptoms but independent scans reveal no issues."
"Despite these complaints and concerns, the Office Depot Companies instructed its store employees to continue to advertise the free tune-up service, continue to run PC Health Check Program on computers brought into the stores, and to convert 50 percent or more of all PC Health Check runs into tech-support service sales," the FTC complaint said.
Store employees who met weekly tech-support sales goals received positive performance reviews, promotions and extra commissions. However, those who didn't meet the corporate-imposed goals were singled out and chastised, according to the FTC report.
Management "censured store managers and store employees who continually failed to meet these company-wide targets," the FTC said.
And does this sound familiar?
"The Office Depot Companies also launched incremental profit generating initiatives whereby it instructed its stores collectively to raise millions of dollars in profit by increasing the number of PC Health Check services performed and the rate of converting the PC Health Check services into tech-service sales," the FTC wrote in its complaint.
You might recall that a similar type of quota pushing led to the 2016 Wells Fargo scandal, in which the bank admitted that employees were opening unauthorized credit card and bank accounts for customers. The employees had established the fake accounts in an effort to meet aggressive sales goals and qualify for bonuses.
In this new settlement, Office Depot has agreed to pay $25 million. Support.com will pay $10 million.
"While Office Depot does not admit to any wrongdoing regarding the FTC's allegations, the company believes that the settlement is in its best interest in order to avoid protracted litigation," the company said in a statement.
The proposed settlement prohibits Office Depot and Support.com from deceptive practices that would make customers think their computers are infected.
The FTC said money collected from the companies would be used to give refunds to consumers. Once the judge formally approves the settlement orders, customers can check the FTC’s refund webpage (ftc.gov/enforcement/cases-proceedings/refunds) to get information on what they may need to do to get a refund.
As consumers, we often deal with aggressive tactics by employees, who unbeknown to us, are under extreme pressure to meet certain quotas. The result is that many customers are persuaded to purchase products or services that they don't need and/or can't afford.
Businesses need revenue to stay viable. We get that. But this recent action by the FTC is yet another reminder of what can happen when companies put unrealistic profit targets over the people they are supposed to be serving.