I've watched a bunch of youtube videos about this and this is what I've gathered.
you're paying for them to operate your computer remotely with logmein support.me or ammyy and run a bunch of free anti-malware scanning tools (they prefer logmein because they can send and run executable files directly through the remote control connection)
they could be doing anything to your pc during the remote control session.
the phone call always starts with some nonsense spiel from a script which is the first scare attempt. it includes directions to open windows event viewer which is the second scare attempt.
the next stage is connecting the remote control tool and if that works, random free scanning/cleaning tool are ran (varies between different scammer groups. there could be a hidden payload in the executable files that were sent)
next stage is closing the deal, they call it a free software maintenance subscription and it costs a lot of money (50-200 usd). they insist that it is free and is an annual fee at the same time. the remote control guy will launch a url/browser with some site that allows you to give them money using a credit card. note that the remote control connection is still active, so they can watch the form being filled in. I've noticed in
this video that the person entered garbage into the billing form, and then the remote control guy promptly ran msconfig and turned off all windows services and set safe boot with command line so that windows will run in a barely operable state.
http://www.troyhunt.com/2012/02/scamming-scammers-catching-virus-call.html