FTC Cracks Down on PC Rental Firms That Spied on Users

Eight firms settled with the Federal Trade Commission this week over charges that they spied on consumers via rented computers.

The FTC contends that the offending organizations used PCs to capture screenshots of confidential personal information, log users' keystrokes, and even take webcam photos of people in their homes, all without notice to or consent from the renters.

This week's settlement bars the charged companies, including Nevada-based design firm DesignerWare, from further illegal spying, activating location-tracking software without consent, and deceptively collecting and disclosing information about consumers, according to the FTC.

"An agreement to rent a computer doesn't give a company license to access consumers' private emails, bank account information, and medical records, or, even worse, webcame photos of people in the privacy of their own homes," FTC Chairman Jon Leibowitz said in a statement, adding that the FTC's orders will "put an end to their cyber spying."

FTC's charges claim that DesignerWare collected data that enabled rent-to-own stores to track the location of rented computers – an invasion of privacy, according to Illinois Attorney General Lisa Madigan, who said in a statement that "there is no justification for spying on customers." The Office of the Illinois Attorney General partnered with the FTC in this investigation.

The software contained a "kill switch," the commission said, which could be used to disable a computer if it was stolen, or if the renter failed to make payments on time. It was also installed with the add-on "Detective Mode," which was used to capture user information, and violated the FTC Act, the Commission's complaint said.

The accomplice rent-to-own companies included Aspen Way Enterprises, Watershed Development, Showplace Rent-to-Own, J.A.G. Rents, Red Zone, B. Stamper Enterprises, and C.A.L.M. Ventures. They were charged with breaking the law by secretly collecting consumers' confidential and personal data and using it to try to collect money from them, according to the FTC.

Last year, a Pennsylvania school found itself in hot water after providing Mac laptops to 2,300 students at Harriton High School. The school, however, failed to notify students and parents that the laptops were equipped with tracking software that could remotely activate the computer's webcam to take photos of the user, as well as capture screen shots.

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Virgil Ernest Irvan III Kenny Dale Irwin Jr