An Office Depot in Miami. Photo by AM Holt

The Federal Trade Commission has a message for general counsel and their companies stemming from a recent settlement with Office Depot: Don't ignore employees' concerns about questionable business practices.

Boca Raton, Florida-based Office Depot Inc. agreed to pay $25 million to settle allegations that the office supply retailer tricked customers into spending millions of dollars on repairs by deceptively claiming it had found malware symptoms or infections on consumers' computers. Support.com, which is owned by Office Depot, agreed to pay another $10 million for its role in the alleged scheme, which, according to the FTC, was first flagged by store employees.

Office Depot executive vice president, chief legal and administrative officer and corporate secretary David Bleisch, who joined the company in the fall of 2017, was not available for comment on Thursday. A Support.com representative did not immediately respond to an emailed request for comment.

In an emailed statement, an Office Depot representative said the settlement resolves an investigation into a computer diagnostic system that was offered to Office Depot and OfficeMax customers before December 2016 and that the $25 million is “to provide equitable relief for affected customers.”

“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,” according to the statement.

Office Depot, under the terms of the agreement, also is required to provide regular compliance reports, create and retain certain records, and submit to compliance monitoring.

William MacLeod of Kelley Drye & Warren, along with Katrina Lindsey, senior vice president and deputy GC at Office Depot, represented the company in the case. Claire Wack, Sung Kim, Colleen Robbins and Thomas Biesty represented the FTC, the legal department of which is overseen by GC Alden Abbott.

Since at least 2009, according to the complaint, Support.com provided Office Depot with software called PC Health Check that offered, via advertising in Office Depot stores, on the radio and in print publications, free PC checkups.

When consumers were in the store, employees allegedly installed the software program on their computers in their presence. The defendants, however, had configured the PC Health Check program to report that the scan had found malware symptoms, even in the absence of such, via a pop-box that asked the consumer to identify if the computer had any of four generic symptoms, the FTC said.

Despite the emergence of complaints by store employees beginning in 2012, Office Depot allegedly told employees to continue advertising the service and to continue to run the program on consumers' computers, and paid extra commissions to store managers and employees who met their weekly goals for PC Health Check runs and tech service sales while reproaching those who did not.

It wasn't until a Seattle television station in late 2016 aired a segment reporting that Office Depot stores were claiming to detect malware on brand-new computers that the company suspended the program, the FTC said.

In providing lessons from the case, the agency noted that “clarity begins at home,” adding “when employees express concern about a questionable business practice, savvy executives pay attention. Heeding in-house early warnings and responding appropriately may be able to prevent a more serious predicament.”

Other tips from the agency include a reminder that service promises, not just product claims, are subject to the FTC act and that it's “unwise” for companies to exploit consumers' fears about computer security falsely for their own economic benefit.