AUSTIN – Two tech companies who allegedly violated the Texas Deceptive Trade Practices Act with deceptive consumer practices and purportedly took millions from consumers across the nation have agreed to a settlement, according to a judgment handed down in July.
The settlement announced by Texas Attorney General Ken Paxton with PC Cleaner, based in Newport Beach, California, and CEO Cashier Myricks, based in Newport Coast, California, stems from the state’s investigation into the companies. The settlement was filed July 13 in Travis County District Court for the 201st Judicial District.
PC Cleaner and Myricks were accused of deceiving consumers into purchasing software through what purported to be a trial scan of customers' computers, according to the attorney general's announcement. Rather than scanning for real problems, the PC Cleaner trial scan always would alarm consumers stating it found problems, the attorney general's announcement states. Then, the consumer would be directed to call a phone number, where a third-party service would inform them that additional and expensive technical support services were required, according to the attorney general's announcement.
"This third-party 'tech support' would often deceive the user into paying hundreds of dollars for unneeded 'repairs,' and sometimes even create an additional recurring monthly credit card charge," the attorney general's announcement said. "Profiting from both scams, PC Cleaner obtained millions of dollars from consumers nationwide."
The Federal Trade Commission (FTC) and Florida's Attorney General announced settlements against PC Cleaner the same day the judgment was filed in Texas. PC Cleaner, Netcom3 Global Inc., Myricks and Netcom3 Inc. agreed to a judgment of more than $29 million. The defendants agreed to pay $258,000 and the remainder of the judgment was suspended.
“Personal computers and laptops play an integral role in the daily lives of most Floridians, and scammers are constantly trying to exploit this dependence on technology,” Florida Attorney General Pam Bondi was quoted in a press release announcing that state's settlement. “That is why I am working with our federal partners to shut down tech support scams that aim to bilk consumers out of millions of dollars every year.”
While similar numbers were not available for Texas, Florida's attorney general reported that the paid version of the program purchased by consumers for $29.99 was downloaded more than 450,000 times between 2011 and 2013.
In 2014, the FTC and the state of Florida filed a complaint and shut down the alleged and massive telemarketing operation. By then, tens of thousands of consumers had been conned out of more than $120 million, according to an FTC press release issued at the time.
The Texas settlement was reached to avoid unnecessary litigation and the resulting expenses, according to the judgment handed down by the court in that state. "Nothing contained herein shall be deemed an admission of liability," the judgment said.
Defendants in this judgment have also settled the case Federal Trade Commission and State of Florida v. Inbound Calls Experts, et al., in Florida's Southern District. In that settlement, the defendants face a judgment of more than $29.5 million, all but $258,000 of which has been suspended, according to the judgment entered in Texas.
"That suspension will only be lifted as to a defendant if, upon proper motion of plaintiffs in that matter, the court determines that the defendant materially misled plaintiff in that action regarding the truthfulness, accuracy and completeness of his or its sworn financial statements, related documents and related information," the judgment in Texas says.
With this judgment, Myricks and PC Cleaner are under a permanent injunction to not misrepresent alleged issues they allegedly find on the computers of prospective customers. The defendants also are ordered to pay $20,000 to the Texas attorney general's office, with half that amount to be used to reimburse attorneys' fees, according to the judgment. The other $10,000 will be applied to civil penalties, the judgment said.