Scammers of a Feather Stick Together: The OMG Story

In the business world today, scams are ubiquitous to the point where many consumers simply assume they are being scammed as often as not, and simply go along for the ride.  In most cases, the scams are only obvious to the scammed. Everyone else is more or less oblivious to instances of outright scams that affect the lives of others. and only become enraged when the scams affect themselves

On November 19, 2014, according to an article in The Washington Post, the Federal Trade Commission  (FTC) announced that it had “temporarily” shut down two telemarketing operations -one in Delray Beach, Florida, and another in next-door Boca Raton – amid claims that the two firms among others in the group – OMG Tech Help and Vast Tech Support – had conned consumers into buying $120 million worth of phony technical support services. Behind the Washington Post‘s bland headline – “FTC: These two ‘tech support’ firms tricked customers out of $120 million”there lurks a much bigger, darker story that reflects  some much needed light on the dark underbelly of online marketing firms.

According to a report from court-appointed receiver David Mandel, OMG Tech Help is owned by Elliott Loewenstern, a childhood friend of Jordan Belfort, the real-life scumbag that Leonardo DiCaprio plays in Wolf of Wall Street.  According to a report in The New York Times, Loewenstern was a top broker at Belfort’s Stratton Oakmont brokerage house, but he was permanently barred from Wall Street in a plea agreement resulting from criminal charges related to his activities as chairman of a different brokerage firm, Biltmore Securities, in 1999.  The grounds to which Loewenstern pleaded “no contest” in the out-of -court settlement included manipulative conduct, failing to disclose adverse interests, and excessive underwriting compensation, grounds strikingly similar to those lodged against Belfort and Stratton Oakmont.

Behind the simply worded statement from the FTC, however, there was a scene similar to the one played out during the last season of HBO’s hit series The Newsroom. Agents from the Federal Bureau of Investigation and the U.S. Marshall’s service, attired in full SWAT gear, swooped down on the offices of the two companies in question and, without warning, turned the employees and their employers out into the street in an effort to preserve the evidence of the alleged illegal activities…and recapture as much of the ill-gotten gains as possible.

There was, however, nothing “alleged” about the illegal activities of these two firms, which were, in fact, absolutely illegal and downright pernicious….and I know this because I worked at OMG Tech Support for a hot minute in 2013, a year before they were shut down.  I wish I could say that I left because I was disgusted with their business practices, but I really left because it was impossible to make a living there without lying to potential customers…and I’m just not a good enough liar to make a living that way. That might sound like the same thing, but my real complaint was that I wasn’t getting enough leads to earn the big commissions that others were getting, because I wasn’t willing to lie and therefore wasn’t getting enough sales to be worthy of the additional leads.

That’s how telemarketing works today.  The more successful you are at closing business, the more leads you get to close, which means that three-quarters of your workforce sits around doing nothing at minimum wage while the top 25 percent close all the business.  In the meantime, however, the 75 percent aren’t getting enough leads to really learn the business, while the 25 percent of the customers who end up with those poorly trained and poorly motivated 75 percenters also end up getting second or third rate service.

Okay, maybe there was a tiny little bit of justifiable concern about the way that OMG and VAST Technical Support, another company caught in the sting, went about marketing their services. I’ve been involved with the computer software industry since 1983 and, as a lifelong salesman, I know a con job when I see one.  More importantly, I know a con artist when I meet one, because I’ve met enough of them over the years to to fill a jumbo jet…and OMG was full of con artists, people who have worked every scam in the book at one time or another.  The problem was that I didn’t have any standing to blow the whistle on these guys, not having been harmed by them.  A class action suit is one thing; whistle-blowing is quite another.  One offers at least the prospect of compensation ; the other almost never does.  Whistle-blowers never do very well after the whistle has been blown.  Would you hire a known whistleblower?

It is actually quite difficult to unsnarl the rat’s nest of interwoven corporate relationships.  Boost Software  and CC Cleaner may or may not be legitimate companies.  Their products might or might not work, but that is irrelevant. What is relevant is the extent to which the makers of supposedly legitimate anti-viral software products have climbed into bed with outright fraudulent operators like OMG.  There’s even some overlap between OMG Tech Support, which operates under a nested hierarchy of several different corporate shells, and Vast Technical Support, which may or may not be the same company, when you have cleared away the cobwebs.  What remains true, however, is that this was a very old con game wrapped up in new clothes and is, in fact, a variation on the “event viewer” scam.

In the original version of this scam, which came out of India around the turn of the century, telemarketers would place blind telephone calls to prospective victims informing them that they had received  a message from Microsoft reporting that there was a virus on the victim’s computer, and offering to remove it for a rather unreasonable fee, pitched to match the fees generally charged for the same services by Best Buy and other reputable companies for performing the same services.  In this case, however, the scammers offer to repair the computer, through the internet, by logging into the victim’s machine.

While it is perfectly possible to repair many computer issues online through a direct connection, it isn’t easy, and it is often very time-consuming…when you know what you are doing.  When you don’t – and the people at OMG didn’t – what you get is a big mess that takes more time and more money to fix.

The updated version of this scam reversed the outcalling paradigm to an inbound calling paradise….for the con artist!  In this version of the scheme, consumers respond to a warning that appears on their computer (courtesy of an embedded advertising message) that they may have a virus and encouraging them to purchase a proprietary anti-virus program.  The catch is that they have to call a convenient toll-free phone number in order to “activate” their anti-virus software…which connects them to the call center, where the fun really begins.

Once the call center operators get the victims on the phone, they walk them through a process that involves using a number of built-in utilities (for which, by the way, Microsoft is entirely to blame) that culminates with a review of the event viewer report that tabulates every warning, error and critical error that your computer has recorded since the last time you flushed that report.  This is where Microsoft is culpable for inadvertent complicity in the scam, because the event viewer is a largely outmoded program that reports near only innocuous glitches that are usually automatically repaired by the system, if not by the next reboot. The vast majority of these messages are related to memory issues, which is indicative that the computers in question are usually older, with minimal ram, and thus unable to meet the memory requirements of newer software.  That, in turn, defines the target market for the scam as older, lower-income computer users who aren’t keeping up with the latest equipment and operating systems.  In other words, senior citizens.

The messages in the event viewer look very ominous, however, to neophyte computer users, making them excellent targets for a bait and switch pitch that gradually builds a $49 software purchase into a $500 annual ticket for technical support the consumer never needed in the first place, but selling that $500 ticket item to someone who called up for a $49 software package is no easy task.  The people who were successful at making those sales were either so naive that they unaware that they were selling garbage, or sufficiently callous not to care.

Bait and switch tactics are an American tradition.  Go into any Sprint office a year into your contract and tell them you want a new phone.  They will look up your account and tell you that you are indeed eligible for a new phone right now, and all you have to do is sign a new service agreement in which the cost of that new phone is buried in a monthly service fee that goes on top of your regular service contract that is, in effect, the same thing as paying off the early cancellation fee on your existing contract and paying cash (over time) for a new phone.

Buying a cell phone is, however, an “eyes open” transaction.  You know what you are getting and what it is supposed to look like.  Computer systems support is a blind item.  You have no idea what you are purchasing until the service has been delivered, by which point it is often quite difficult to figure out whether the services were ever actually needed in the first place. In addition to the customers who were gulled by these companies, many of their employees were also left high and dry when the FTC closed the companies down. Salaries and commissions went unpaid, and probably never will be paid since they would be the fruits of a criminal enterprise, if the government wins its case against the malefactors in question.

This hits home, because my nephew was one of their star billers, and he got shown the door along with everyone else three weeks ago, just before his wedding day, which is not a good time to get canned, not that there is ever a good time to be fired.  He had gone to work there after I left and, because he was working for one of the other branches of this many-headed hydra, I had assumed that even if OMG was as crooked as a shillelagh, the other branches of the hydra were on the up and up.  My bad.  Sorry, nephew.

Where Things Stand Now:  If you had any dealings with OMG, VAST, or any of the other entities involved in this quagmire, visit the court-appointed receiver’s web site, http://omgtechhelp.wix.com/omg-tech-help, for the most up-to-date information. 

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