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FTC short-circuits privacy-invading computer spy ring

FTC says companies involved captured screenshots, keystrokes and pictures of unknowing customers

By Layer 8 on Tue, 09/25/12 - 2:27pm.

The Federal Trade Commission today said it settled a case that involved seven rent-to-own PC firms and a software vendor which worked together to spy on consumers using the rented computers.  The software captured screenshots of confidential and personal information, logged computer keystrokes, and in some cases took webcam pictures of people in their homes, all without owner notice or consent.

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The FTC said the software came from DesignerWare, LLC, a company that licensed its programs to rent-to-own stores to help them track and recover rented computers.  The FTC also reached settlements with seven companies that operate rent-to-own stores and licensed software from DesignerWare, including franchisees of Aaron's, ColorTyme, and Premier Rental Purchase.

According to the FTC, DesignerWare's software contained a "kill switch" the rent-to-own stores could use to disable a computer if it was stolen, or if the renter failed to make timely payments. DesignerWare also had an add-on program known as "Detective Mode" that purportedly helped rent-to-own stores locate rented computers and collect late payments.  DesignerWare's software also collected data that allowed the rent-to-own operators to secretly track the location of rented computers, and thus the computers' users.

"When Detective Mode was activated, the software could log key strokes, capture screen shots and take photographs using a computer's webcam, the FTC alleged.  It also presented a fake software program registration screen that tricked consumers into providing their personal contact information. Data gathered by DesignerWare and provided to rent-to-own stores using Detective Mode revealed private and confidential details about computer users, such as user names and passwords for email accounts, social media websites, and financial institutions; Social Security numbers; medical records; private emails to doctors; bank and credit card statements; and webcam pictures of children, partially undressed individuals, and intimate activities at home," according to the FTC.

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In its complaint against DesignerWare, the FTC charged that licensing and enabling Detective Mode, gathering personal information about renters, and disclosing that information to the rent-to-own businesses was unfair, and violated the FTC Act.  The agency also alleged that DesignerWare's use of geolocation tracking software without first obtaining permission from the computers' renters and notifying the computers' users was unfair and illegal.  It charged that providing the rent-to-own operators the means to break the law was unfair, and providing the fake registration forms to obtain consumer data was deceptive. 

The proposed settlement orders feature no punitive damages, but rather bans the companies involved from using monitoring software like Detective Mode and will ban them from using deception to gather any information from consumers.  They also will prohibit the use of geolocation tracking without consumer consent and notice, and bar the use of fake software registration screens to collect personal information from consumers.  In addition, DesignerWare will be barred from providing others with the means to commit illegal acts, and the seven rent-to-own stores will be prohibited from using information improperly gathered from consumers in connection with debt collection.  All the proposed settlements contain record keeping requirements to allow the FTC to monitor compliance with the orders for the next 20 years, the agency said.

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